Spring Statement - PwC comments on increase to National Insurance Contribution threshold
23 Mar 2022
Commenting on the increase to the National Insurance Contribution threshold, Christine Cairns, tax partner at PwC, says:
While the tax-free personal allowance has steadily risen in recent years to £12,570 in line with long-standing Government policy, the NI threshold has lagged behind, quietly hovering below £10,000, partly because it’s so closely linked with state welfare benefits such as pensions and jobseeker’s allowance. However, last year’s announced 1.25% increase from April brought NI sharply into focus and having reaffirmed his commitment to the rise, increasing the threshold was one of the only options left to try and soften the blow for those who will feel it most.
“While it might seem curious to be effectively both increasing and cutting NI at the same time, today’s change is clearly targeted at helping those with the lowest earnings who may already be below the income tax threshold. The true impact of this cut, as well as of the future decrease of the basic rate tax rate, for middle income earners will need to be assessed against the impact of the freezing of the income tax bands until 2026.
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