National Insurance
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Tax and NICs – What lies ahead?
The Government has already made announcements about increases in tax and NICs over the next few years. However, the personal tax changes have now been replaced and the updated summary is as follows:
- From April 2009, the upper earnings limit for Class 1 and Class 4 NIC has been increased substantially in order to align it with the level at which people generally start to pay higher rate income tax (£844 per week). The new upper accrual point (£770 per week) for Class 1 NICs sets a cap on the level above which there will be no additional pension benefits (there are none for Class 4 NICs in any case).
- From April 2010, those with adjusted net incomes above £100,000 will have their basic personal allowances scaled back to a minimum of Nil. New tax rates will apply to incomes over £150,000 – 50% for savings and non-savings income; 42.5% for dividend income. The small companies’ rate of corporation tax will increase to 22%.
- From April 2011, there will be a general increase of 0.5% to the main NIC rates. At the same time, the NIC threshold will be brought back into line with the basic personal allowance.
