NI rates hiked - how much more will workers pay?
Earlier today (7 September) Boris Johnson announced that NI and dividend tax rates will be hiked to help fund social care, pay for coronavirus support measures and clear the NHS backlog. Who will be affected and by how much?

Firstly, NI rates will increase by 1.25% from April 2022. This will apply to both primary and secondary Class 1 contributions, which will increase to 13.25% and 3.25% for earnings up to, and above, the upper earnings limit respectively. Class 4 rates will also increase to 10.25% and 3.25%. The additional 1.25% will be carved out as a separate levy from April 2023 - essentially it will be a new tax.
To illustrate what this will mean for employees, the following table is a useful reference, assuming the current NI thresholds apply:
Salary |
Current NI bill |
Expected increased NI bill |
Change |
£15,000.00 |
£651.84 |
£719.74 |
£67.90 |
£25,000.00 |
£1,851.84 |
£2,044.74 |
£192.90 |
£35,000.00 |
£3,051.84 |
£3,369.74 |
£317.90 |
£45,000.00 |
£4,251.84 |
£4,694.74 |
£442.90 |
£55,000.00 |
£4,951.84 |
£5,519.74 |
£567.90 |
Secondly, the dividend tax rates will also increase by 1.25%, i.e. to 8.75%, 33.75% and 39.35% for basic, higher and additional rate taxpayers respectively.
Related Topics
-
Late payment interest to be cut
A cut to the Bank of England base rate means there will be another reduction in HMRC's penalty interest rates. What are the new charges and when will they take effect?
-
Opt out of winter fuel payments by 15 September
HMRC has issued new guidance on the winter fuel payments. What do you need to know?
-
Change to IHT on pensions proposals
HMRC has published a policy statement announcing an important change to its plans to include pension savings in an individual's estate for inheritance tax (IHT) purposes. What’s the full story?