| One of the significant
announcements in the Pre-Budget Report
last month was a further increase in
national insurance contributions (NIC)
which is to take effect from 6 April
2011.
The NIC rates and limits are broadly
frozen for 2010/11 at the 2009/10 figures,
with a couple of minor exceptions.
An increase in the rates of NIC is
proposed from April 2011 with an extra 1%
being added to the rates applicable to
employers, employees and the
self-employed. The main rate of Class 1
(employee) NIC will be 12% and the Class 4
rate will be 9%. The employer rate will
increase to 13.8%.
The additional rate of Class 1 and 4
contributions, payable on pay and profits
currently in excess of £43,875, will also
increase from the current 1% to 2%.
The government has announced that it
will protect those at the lower end of the
earnings scale by an increase in the point
at which contributions become payable. It
is therefore expected that employees
paying the standard employee rate and
earning below £20,000 will pay less NIC
overall as a result of the change.
The government had previously announced
that NIC rates would increase by 0.5% from
April 2011. This further increase of 0.5%
will represent a significant increase in
costs particularly for employers.
Internet link:
HMRC pbrn1 |
