How to identify NIC increases on the payslips
For the tax year 2022- 2023, the rates of Class 1 for employer and employee National Insurance contributions (NIC) are increased by 1.25 percentage points, alongside the rates of Class 1A, Class 1B and Class 4 contributions.
These increases are temporary pending the introduction of the Health and Social Care Levy from 6 April 2023. The upcoming levy is designed to raise funds for health and social care, just like temporary increases in NIC in the meantime. NIC rates will revert to 2021-2022 levels from 6 April 2023.
NIC rates for 2022/23
The main primary contribution rate for 2022-2023 that is paid on earnings that fall between the primary threshold (£190 per week; £823 per month; £9,880 per year) and the upper secondary threshold (£967 per week; £4,189 per month; £50,270 per year) is 13.25% and the additional primary rate which is paid on earnings in excess of the upper earnings limit is 3.25%.
Employers will pay secondary contributions at the rate of 15.05% on earnings in excess of the secondary threshold (set at £175 per week; £758 per month; £9,100 per year).
If an upper secondary threshold is applicable, employers will pay secondary contributions at the rate of 15.05% above the relevant secondary threshold (£967 per week; £4,189 per month; £50,270 per year in cases where the employee is under the age of 21, an apprentice under the age of 25 or is an armed forces veteran in the first year of their civilian employment since leaving the armed forces and £481 per week; £2,083 per month; £25,000 per year in a case where the employee is a new Freeport employee). The 1.25% increase does not apply to earnings charged at the zero rate.
Employers will also pay Class 1A and Class 1B NIC at 15.05% for the 2022-2023 tax year. For more information please visit Gov.uk website.
How to identify the increases
In the Employer Bulletin issue in December 2021, HMRC asked employers to include a message for employees on all payslips between 6 April 2022 and 5 April 2023 and explain that their increased NIC are used to meet health and social care costs. They specifically instructed that the payslip message should read ‘1.25% uplift in NIC funds NHS, health & social care’.
HMRC reiterated this in the February 2022 issue. It was noted, that HMRC requested payroll software providers this message to be included in their software packages. However, some employers might need to amend payslips directly in order to include this message. HMRC will also be sending out reminders to employers.