Changes to National Insurance contributions
01 November 2018
The following changes were announced in or alongside Budget 2018
Limits and thresholds
National Insurance contribution (NIC) limits and thresholds for 2019-20 were published in associated documents, showing:
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The weekly Lower Earnings Limit (LEL) increases to £118 (from £116)
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The weekly primary and secondary thresholds (PT, ST) increase to £166 (from £162)
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The Upper Earnings Limit (UEL), Upper Secondary Threshold (UST) for under 21s and Apprentice Upper Secondary Threshold (AUST) for under 25s increase to £962 a week (from £892)
The NICs rates remain unchanged.
Employment Allowance
The Employment Allowance is an annual amount that is currently available to all businesses and charities (with some exclusions) to offset against their Class 1 secondary NICs bill. It remains at £3,000 for 2019-20.
It was introduced in April 2014 to support employers to grow and hire new staff. However, it is a flat rate regardless of the size of the employer and is therefore less likely to be an incentive for larger employers. Therefore, the government has decided to target this allowance at smaller businesses.
From April 2020, the Employment Allowance will be restricted to organisations with a NICs bill below £100,000 in the previous tax year. Over 99% of micro-businesses and 93% of small businesses will still be eligible for the Allowance.
Draft National Insurance contributions Bill
The draft National Insurance contributions Bill contained measures to abolish Class 2 NICs – as previously announced in September, this change will not happen take place following concerns raised that they would have an adverse impact on the lowest self-employed individuals.
Other proposals in the draft Bill will go ahead from April 2020: the introduction of employer NICs on termination payments and on income from sporting testimonials.
Read the CIPP’s summary of Budget 2018 for further details of announcements.