Section 1 increases the primary threshold for class 1 contributions with effect from 6 July 2022 and confirms that the increases ‘do not affect any liability to primary Class 1 contributions for any tax week commencing before that date’. The thresholds for 2022/23 are set out as follows in HMRC’s Rates and thresholds tables for employers publication:
6 April 2022 to 5 July 2022
£190 per week;
£823 per month; and
£9,880 per year.
6 July 2022 to 5 April 2023
£242 per week;
£1,048 per month; and
£12,570 per year
The lower profits limit (LPL) for class 4 contributions is increased to £11,908 (up from £9,880) with effect for the tax year 2022/23. This mirrors the annualised effect of the increase in the class 1 primary threshold to £12,570 with effect from 6 July (i.e. taking effect part-way through the 2022/23 tax year). Section 2 confirms that, with effect from 6 April 2023, the LPL will rise to £12,570 – fully aligning with the income tax personal allowance.
Section 3 sets out two regulation-making powers in relation to class 2 contributions:
the Treasury is required to align the point at which class 2 contributions become payable with the LPL, meaning that individuals whose profits fall below the LPL will not pay class 2 contributions; and
the Treasury is empowered to provide that individuals whose profits fall between the class 2 small profits threshold and the LPL are treated as making class 2 contributions.
Section 4 updates the primary threshold figure used in the NICs annual maxima calculation for class 1 contributions (which applies where an individual has more than one employment in the tax year). The revised amount for 2022/23 is set at £229 which is the weekly equivalent of £11,908.
The annual maxima calculations have also recently been updated to reflect the 1.25 percentage point increase in the rates of class 1 and 4 contributions for 2022/23 (see SI 2022/300).
Section 1 increases the primary threshold for class 1 contributions with effect from 6 July 2022 and confirms that the increases ‘do not affect any liability to primary Class 1 contributions for any tax week commencing before that date’. The thresholds for 2022/23 are set out as follows in HMRC’s Rates and thresholds tables for employers publication:
6 April 2022 to 5 July 2022
£190 per week;
£823 per month; and
£9,880 per year.
6 July 2022 to 5 April 2023
£242 per week;
£1,048 per month; and
£12,570 per year
The lower profits limit (LPL) for class 4 contributions is increased to £11,908 (up from £9,880) with effect for the tax year 2022/23. This mirrors the annualised effect of the increase in the class 1 primary threshold to £12,570 with effect from 6 July (i.e. taking effect part-way through the 2022/23 tax year). Section 2 confirms that, with effect from 6 April 2023, the LPL will rise to £12,570 – fully aligning with the income tax personal allowance.
Section 3 sets out two regulation-making powers in relation to class 2 contributions:
the Treasury is required to align the point at which class 2 contributions become payable with the LPL, meaning that individuals whose profits fall below the LPL will not pay class 2 contributions; and
the Treasury is empowered to provide that individuals whose profits fall between the class 2 small profits threshold and the LPL are treated as making class 2 contributions.
Section 4 updates the primary threshold figure used in the NICs annual maxima calculation for class 1 contributions (which applies where an individual has more than one employment in the tax year). The revised amount for 2022/23 is set at £229 which is the weekly equivalent of £11,908.
The annual maxima calculations have also recently been updated to reflect the 1.25 percentage point increase in the rates of class 1 and 4 contributions for 2022/23 (see SI 2022/300).
