To fund new investment in health and social care, the Health and Social Care Levy Act provided for a temporary 1.25% increase in the main and additional rates of class 1, class 1A, class 1B and class 4 NICs for 2022/23; followed by a new 1.25 Health and Social care Levy for 2023/24.
The government has now reversed the temporary increase in NICs and cancelled the new Levy completely. With effect from 6 November 2022:
- the primary rates of class 1 NIC generally reduced from 13.25% to 12% and 15.05% to 13.8%
- the secondary rate of class 1 NIC reduced from 15.05% to 13.8%
The rate of class 1A and 1B NIC for 2022/23 will generally be 14.53%, reflecting the averaging of the different rates applying through the year.
Following similar principles, the class 4 NIC rates on self-employment profits will be 9.73% and 2.73% for 2022/23.
From July 2022, the NIC primary threshold and lower profits limit were increased to align with the income tax personal allowance; they will be maintained at this level from April 2023 to April 2028. The class 2 lower profits threshold will also be fixed from April 2023 to April 2028 to align with the lower profits limit.
The government will fix the lower earnings limit and the small profits threshold at 2022/23 levels in 2023/24, namely £6,396 and £6,725 per annum respectively.
The class 2 and class 3 NIC rates for 2023/24 will be lifted to £3.45/ week and £17.45 respectively.
From April 2023 the level at which employers start to pay class 1 NICs for their employees will be fixed at £9,100.