Over 30 million tax payers to benefit from tax cut

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Around 31 million taxpayers will benefit from a tax cut this April.

National Insurance Contributions (NIC) thresholds will rise to £9,500 per year as of April 6, 2020.

The changes will result in a ‘typical employee’ will pay around £104 less in 2020-2021, while self-employed people, who pay a lower rate, will pay £78 less.

HM Revenue & Customs announced that all other thresholds will rise with inflation, except for the upper NICs thresholds which will remain frozen at £50,000.

The government said it is committed to keeping ‘tax low to ensure people keep more of what they earn’.

The following figures apply for the year 2020-2021.

Class 1 National Insurance thresholds

2020 to 2021

Lower earnings limit

£120 per week
£520 per month
£6,240 per year

Primary threshold

£183 per week
£792 per month
£9,500 per year

Secondary threshold

£169 per week
£732 per month
£8,788 per year

Upper secondary threshold (under 21)

£962 per week
£4,167 per month
£50,000 per year

Apprentice upper secondary threshold (apprentice under 25)

£962 per week
£4,167 per month
£50,000 per year

Upper earnings limit

£962 per week
£4,167 per month
£50,000 per year

Employee (primary) contribution rates

National Insurance category letter

Earnings at or above lower earnings limit up to and including primary threshold

Earnings above the primary threshold up to and including upper earnings limit

Balance of earnings above upper earnings limit

A

0%

12%

2%

B

0%

5.85%

2%

C

nil

nil

nil

H (apprentice under 25)

0%

12%

2%

J

0%

2%

2%

M (under 21)

0%

12%

2%

Z (under 21 – deferment)

0%

2%

2%

 For further advice on this or any other payroll matter contact Lisa McLeod, payroll manager, on 01244 343504.

*Figures from HMRC.