National Insurance rates and thresholds 2022/2023

When it comes to calculating National Insurance Contributions (NICs), we firstly need to know the relevant thresholds and then the rates to apply to the earnings within these thresholds

The thresholds

The March 2021 Budget announced that the UK-wide annual National Insurance Upper Earnings Limit (UEL) threshold will be frozen at £50,270 until tax year 2025/26.  The UEL is aligned to the UK Higher Rate threshold for Income Tax and also: 

• The Upper Secondary Threshold (UST for under 21s)
• The Apprentice Upper Secondary Threshold (AUST for apprentices under 25) and
• The Veterans Upper Secondary Threshold (VUST for veterans in civilian employment) 

The Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2021  legislated for this.  However, other thresholds were not frozen and Autumn Budget 2021 confirmed that the following will be uprated by the value of CPI in September 2021 (3.1%):

• The Lower Earning Limit
• The Primary Threshold
• The Secondary Threshold

The per-pay period values were announced to software developers on 03 November 2021:

Note that the FUST is a new threshold for the 2022/23 tax year.

Rates 

In 2022/23, prior to the introduction of the Health and Social Care Levy in the following tax year (to fund health and social care in England and part of the UK Government’s ‘Build Back Better’ initiative), NICs rates will increase by 1.25%.  The following table shows the main rates in 2022/23 compared to those that apply in 2021/22:

The table does not include:

• Mariner categories
• Table letter B increases from 5.85 to 7.1%
• Table letter C which does not increase

Class 2 and 3 NICs are not impacted and the Overview of taxation Legislation and Rates (the OOTLAR) confirms the 2022/23 weekly values.

All together

So, putting the thresholds and rates together gives the following consolidated table.  However, it is necessary to detail the meaning of all the NICs category letters:

• A – Standard rate
• B – Reduced rate
• C – Over State Pension age
• F – Freeport standard rate
• H – Apprentice under 25
• I – Freeport reduced rate
• J – Standard deferment
• L – Freeport deferment
• M – under 21
• S – Freeport over State Pension age
• V – Veterans standard
• Z – Standard under 21 deferment

The table for employers is more complicated as it requires consideration of the Freeport Upper Secondary Threshold (the FUST), though this will not apply to many employers.  The reason for considering this threshold is because it is set at a lower rate than the UST, AUST and VUST, all aligned to the UEL.  So, in reality, if the FUST is not a consideration, the FUST column can be ignored and the ‘above FUST’ in the adjoining column can be removed: