The NIC thresholds for Class 2 NICs (for the self-employed) have been set for 2022-23 (the Social Security (Class 2 National Insurance Contributions Increase of Threshold) Regulations 2022).
The regulations set a new threshold – the “lower profits threshold” – of £11,908. Class 2 contributions are payable by self-employed individuals whose profits for 2022-23 exceed that figure.
The regulations also set a “small profits threshold” of £6,725. A self-employed individual who has profits of at least this amount is treated as having paid a Class 2 contribution. This ensures that such individuals will maintain eligibility to contributory benefits without actually having to pay Class 2 NICs.
The calculation of the figure of £11,908 was explained back in March 2022 in a Tax Information and Impact Note, as follows:
“In the case of the [Primary Threshold for employees], it is intended that the measure will have effect from 6 July 2022.
In the case of the [Lower Profits Limit] (LPL), because self-employed NICs are calculated on an annual basis, the measure will apply from the start of the 2022-23 tax year, but with an annualised threshold, so the effect is equivalent across the tax year to those who are employed and paid on a weekly or monthly basis. This means the LPL will be £11,908 for the 2022-23 tax year which is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570, reflecting the position for employees.
Changes to Class 2 NICs will start from the beginning of the 2022-23 tax year, reflecting the annualised basis of the thresholds underpinning Class 2 NICs.”
https://www.legislation.gov.uk/uksi/2022/1329/contents/made
Related content from Claritax Books
The complex rules for National Insurance contributions are covered in depth in National Insurance Contributions, by Karen Speight.
