Pre-Budget Report – National Insurance Changes
In a move that will affect almost all employees and self-employed taxpayers in the UK, The Chancellor has announced further increases to the rates and thresholds for National Insurance Contributions (NIC’s).
The 2008 Pre-Budget Report had announced that the Class 1 and Class 4 NIC’s would be increased to 11.5% and 8.5% respectively from 6 April 2011. The Class 1 employer rate was also set to increase to 13.3% from 2011-12 whilst the additional rate of Class 1 and 4 NIC’s was set to be increased to 1.5%.
The Chancellor has now added a further 0.5% to all these rate increases meaning that Class 1 and Class 4 NIC’s will increase to 12% and 9% respectively. Whilst the Class 1 employer rate will increase to 13.8% from 2011-12 and the additional rate of Class 1 and 4 NIC’s to 2%. The primary threshold and lower profits limit will increase to £570 from 2011-12.
In addition the Lower Earnings Limit (LEL) will increase by £2 to £97 from 2010-11. Also from 2010-11, the special Class 2 rate for volunteer development workers will increase by from £4.75 to £4.85 per week.