Employment Taxes & NIC

National Minimum Wage

The National Minimum Wage will be replaced from April 2016 with a new National Living Wage for over 25’s. The introductory rate will be £7.20 per hour, but it is intended for this to rise to no less than £9 an hour by 2020.

Employment Allowance Increase

Businesses and charities will be able to reduce their employer National Insurance bill by a further £1,000 from April 2016, as the Employment Allowance which they can claim will rise from £2,000 to £3,000. From April 2016 however, the employment allowance will not be available where the director is the only employee in the company.

This means, next year, four people could be employed full time on the National Living Wage and the employer would pay no National Insurance at all.

Rates of National Insurance Contributions

Announced in the Queens speech on 27 May 2015, legislation will be introduced to set out that Class 1 NICs rates payable by employers and employees will not be increased for the duration of this Parliament. The employees main rate of class 1 contribution is currently 12%, with a lower rate of 2% on earnings over £815 per week. The NIC rate for employers is 13.8%.

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Nov 19

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