The Mini Budget – Key talking points
It was budget day on 23rd March 2022 with some interesting changes made to NIC in particular so, we have written up a summary of the key talking points from Rishi Sunaks Budget. If you would like to discuss any of this in more depth, please get in touch!
NIC & Income tax aligned for employees
It was announced that the class 1 national insurance primary threshold will be increased to £12,570 as of 6th July 2022. This means individuals who are employed will be able to earn £12,570 without any deductions!
However, the Secondary class 1 NIC contributions (Due to raise to 15.05% in 2022) will not raise in conjunction with the primary threshold.
NIC for the self employed
Class 4 NIC lower profit limit will raise to £11,908 in 2022/2023 meaning you can earn £11,908 and pay no class 4 NI if you’re self-employed. This will then follow class 1 primary contributions and be aligned with the personal allowance from the 2022/23 tax year.
Class 2 national insurance contributions which are payable when a self-employed individual earns over £6,515 will have a threshold raise in line with the class 4 raises.
So, by 2022/2023 self employed individuals earning £12,570 will pay no national insurance contributions on their earnings.
Currently for the 2021/22 tax year a self-employed individual earning a net income after expenses of £12,570 would pay £428.78 worth of national insurance contributions. As of the 2022/2023 tax year this will reduce to £0.
Income tax cut
By 2024 basic rate income tax will be cut to 19% from 20%. Another positive for the self employed but a long way off.
Employment allowance increased from £4,000 to £5,000. Currently an employer can “accumulate” £4,000 worth of national insurance liabilities without having to pay. Now the limit has increase by £1,000.
Temporary Cut to fuel duty
The duty on fuel petrol and diesel will be cut by 5p per liter for 12 months! So if you fill up your tank with 50 litres you save yourself £2.50……whoop de do!