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The employee national insurance thresholds have changed as of 6th July 2022. This means that the Class 1 NIC threshold for employees will have parity with the income tax threshold. This is also known as the personal allowance threshold. It was originally announced as part of the Spring Statement in March and now the time has come for the changes to be made.

The change in national insurance thresholds has been designed to lessen the impact of the 1.25% rise in employee NICs from 12% to 13.25%. This is based on earnings up to £50,270 per annum. Earnings above £50,270 per annum will now incur NICs of 3.25% instead of the previous amount of 2%. It is thought that this revised NIC threshold will remove NICs altogether for around 2.2 million workers across the UK.

How Does This Affect Employees?

Between the 6th of April and 5th of July 2022 employees were able to earn £190 a week without paying Class 1 NICs. This was the equivalent to £823 per month. As of the 6th of July 2022, right up until 5th April 2023, this weekly threshold will increase. It will increase to £242 per week, which is the equivalent of £1,084 per month.

How Does This Affect Directors Of Limited Companies?

Directors of limited companies pay their NICs on an annual basis, unlike employees. The NICs for directors of limited companies are calculated from the annual earnings of the director. This means that for 2022-2023 a director of a limited company will be able to earn up to £11,098 before paying Class 1 NICs.

How Does This Affect The Self Employed?

Just like directors of limited companies, self-employed workers also pay NICs on an annual basis. This means that for the 2022-2023 tax year self-employed workers will be able to earn up to £11,908 before paying any Class 4 NICs.


Confused about how the national insurance threshold changes that are coming in this month will affect you, your business, your accounts or your employees? Give us a call. Whether you’re a busy sole trader, the owner of a small business or a self-employed worker as a side-line, we can help. Call our team now to see how we can help with your tax, accounts or business growth and profit.

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