The Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2023 (SI 2023/236) were made on 1 March and come into force on 6 April 2023.
For Class 2 contributions (payable by the self-employed), the rate of £3.15 increases to £3.45. The lower profits threshold increases from £11,908 to £12,570.
For Class 3 (voluntary) contributions, the rate of £15.85 increases to £17.45.
The accompanying Explanatory Note explains the full range of the SI as follows:
“This instrument is being made to give effect to the annual re-rating of NICs rates, limits and thresholds. It specifies:
- the rate of Class 2 contributions that are payable by the self-employed;
- the small profits threshold (SPT), the threshold at which self-employed individuals start to accrue entitlement to certain contributory benefits without paying Class 2 NICs. Below this threshold, the self-employed may pay Class 2 NICs voluntarily to protect their entitlement to certain contributory benefits;
- the rate of Class 3 contributions, which eligible persons can choose to pay to satisfy the conditions for certain contributory benefits;
- the lower profits threshold (LPT), which is the level of taxable profits at which the self-employed become liable to pay Class 2 NICs;
- the lower profits limit (LPL), which is the level of taxable profits at which the self-employed begin to pay Class 4 NICs at the main Class 4 percentage rate (which is 9% for tax year 2023-24);
- the lower earnings limit (LEL) for primary Class 1 NICs, which is the level of earnings at which employees start to gain access to certain contributory benefits;
- the primary threshold (PT), which is the level of earnings above which employees begin to pay primary Class 1 NICs (known as “employee contributions”) at the main percentage rate (which is 12% for tax year 2023- 24);
- the upper earnings limit (UEL), which is the level of earnings above which employees begin to pay primary Class 1 NICs at the additional percentage rate (which is 2% for tax year 2023-24);
- the secondary threshold (ST), which is the level above which employers begin to pay secondary Class 1 NICs (known as “employer contributions”) in respect of their employees’ earnings at 13.8% for tax year 2023-24;
- the upper secondary threshold (UST), which is the level of earnings above which employers of employees under the age of 21 are no longer eligible for the age-related secondary percentage of Class 1 NICs (which is 0% for tax year 2023-24);
- the apprentice upper secondary threshold (AUST), which is the level of earnings above which employers of relevant apprentices under the age of 25 are no longer eligible for the apprentice-related secondary percentage of Class 1 NICs (which is 0% for tax year 2023-24);
- the veteran upper secondary threshold (VUST), which is the level of earnings above which employers of eligible veterans are no longer eligible for the veteran-related secondary percentage of Class 1 NICs (which is 0% for tax year 2023-24);
- the freeport upper secondary threshold (FUST), which is the level of earnings above which employers of eligible workers in freeports are no longer eligible for the freeport-related secondary percentage of Class 1 NICs (which is 0% for tax year 2023-24);
- and the prescribed equivalents of the LEL, PT, UEL, ST, UST and AUST, VUST and FUST for those earners who are paid otherwise than weekly.”
https://www.legislation.gov.uk/uksi/2023/236/contents/made
Related content from Claritax Books
The complex rules for National Insurance contributions are covered in depth in National Insurance Contributions.
