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PwC comment on NICs threshold increase

05 Jul 2022

From 6 July 2022 the primary threshold for employee national insurance contributions (NICs) will increase from £9,880 to £12,570 per year. This is the amount an employee can earn before they start paying NIC, and this week’s increase brings this threshold in line with the income tax personal allowance. 

Christine Cairns, tax advisor at PwC, says:

This threshold increase is equivalent to a £356 national insurance cut for those employees earning £12,570 or more per year. For many this will more than offset the 1.25% increase in national insurance contributions which came into effect from 6 April 2022, and alleviate some of the pressure caused by the significant increase to the cost of living.

The primary threshold for employers will remain the same,, which means that national insurance is likely to impact decisions on any planned wage increases in the year ahead.  Some of the cost of the increase in the NIC rates will therefore still likely be borne by employees.  

The true impact of this cut will need to be assessed against the impact of the freezing of the income tax bands until 2026, as well as the rate of inflation and the increase to the cost of living.”

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