This year’s Spring statement focused on protecting people from current high inflation and continuing to help the economy recover from COVID, despite reduced economic growth forecasts in the face of the conflict in Ukraine.
Big increase to National Insurance threshold
The Government will increase the amount someone can earn before they start paying National Insurance contributions from £9,880 to £12,570 from July 2022. The change will save a typical worker £330 and more than offset the impact of the new 1.25% health and social care levy for many workers that comes into force from April.
Simon Hubbard, a senior consultant and actuary at Quantum Advisory, said:
“There has been some concern about the new health and social care levy at a time when prices are rising and family budgets are being squeezed. Reduced National Insurance bills will bring some welcome relief and leaves lower earners paying no Income Tax or National Insurance.
However, this does have a knock-on effect and will mean that salary sacrifice arrangements for pension contributions for those employees who currently earn between £9,880 and around £12,570 will no longer be beneficial to them. Employers who offer these types of arrangements should review these arrangements to ensure that employees within these thresholds are not impacted.”
Reductions in income tax to come
The Government will also reduce the basic rate of income tax from 20% to 19% from 2024, with plans to simplify the tax system as well.
About Quantum Advisory
Established in 2000, we are an independent, owner-managed actuarial and employee benefits consultancy that provides straight-talking, no-nonsense advice to employers and pension scheme trustees. We design, maintain and review pension schemes and related employee benefits so that they operate efficiently and effectively. We also help communicate these benefits in a straightforward way so that employees understand their real value.
Simon Hubbard
Quantum Advisory
029 2083 7968
simon.hubbard@qallp.co.uk