The Treasury has announced the new tax NIC scales for 2020/21.
The announcement referred to an increase in the level at which employees and the self-employed start to pay NICs. As trailed in the Conservatives’ election manifesto, this trigger point will rise from £8,632 in 2019/20 to £9,500 in 2020/21. In practice the limit would have risen to £8,788 anyway, as it is automatically inflation-proofed unless the Chancellor decides otherwise.
The net result is a maximum saving of around £104 a year if you are employed and pay Class 1 NICs and £78 if you are self-employed paying Class 4 NICs. The Treasury’s new release says that ‘…the government has set out an ambition to raise the National Insurance thresholds to £12,500,” but that aspiration – worth up to another £360 a year – has no timescale attached to it.
If you are an employer, you may be surprised to learn that the threshold at which employer Class 1 NICs for an employee start to be charged in 2020/21 did not rise to £9,500 but benefited only from the inflationary uplift to £8,788.