The government has announced that there will be an increase to National Insurance rates of 1.25% and this will apply to employees and employers liable for Class 1 NICs and self-employed individuals liable for Class 4 NICs.
It will be introduced from April 2022. For 2022-23, due to the time it takes to prepare HMRC systems, this will be done through an increase in NICs rates by 1.25 per cent.
Employees will see their National Insurance contributions increase from 12% to 13.25% and 2% to 3.25%for the basic rate/higher rate.
Employers will see contributions increase from 13.8% to 15.05%.
The self employed will see the rates for class 4 National Insurance increase from 9% to 10.25% and 2% to 3.25% for the basic rate/higher rate
Once systems have been updated in 2023-24, a formal legal surcharge of 1.25 per cent will replace the increase in NICs rates and will also apply to those working above State Pension age; the underlying NICs rates will return to their previous level.
From April 2022, basic rate income taxpayers will pay 8.75 per cent on dividends (up from 7.5%), higher rate taxpayers must pay 33.75% (up from 32.5%) and additional rate taxpayers will be taxed at 39.35% (up from 38.1%).