How much will the NI increase cost you?

From April 2022, NI rates will increase by 1.25%. This will apply to both primary and secondary Class 1 contributions, increasing them to 13.25% and 3.25% for earnings up to, and above, the upper earnings limit respectively. Class 4 rates will also be increased to 10.25% and 3.25%. This additional 1.25% will be classed as a separate levy from April 2023 - essentially becoming a new tax.

The levy will also apply to individuals above State Pension age with employment income or profits from self-employment above £9,568.

Assuming the current NI thresholds apply we set out some workings below to give a guide of what this will actually cost you:

Dividend tax rates have not been excluded from an increase and will also increase by 1.25%, i.e. to 8.75% for basic rate, 33.75% for higher rate and 39.35% for additional rate taxpayers.