2020/21 NIC rates and thresholds confirmed

Newsletter issue - March 2020.

Around 31 million taxpayers are expected to benefit from an increase in take home pay from April 2020 when the National Insurance Contributions (NIC) threshold rises from £8,632 to £9,500 per year.

A typical employee will save around £104 in 2020/21, while self-employed people, who pay a lower rate, will have around £78 cut from their bill.

All the other thresholds will rise with inflation, except for the upper NICs thresholds which will remain frozen at £50,000, as announced at Budget 2018.

2020/21 rates and threshold are as follows:

Primary/employee Class 1 NICSs:

Lower earnings limit (LEL):

Primary threshold (PT):

Upper earnings limit (UEL):

Rate on earnings up to PT : 0%

Rate above PT: 12% on £183.01 to £962 weekly, 2% on excess over £962 weekly

Reduced rate: 5.85% on £183.01 to £962 weekly, 2% on excess over £962 weekly

Secondary/employer Class 1 NICs:

Secondary earnings threshold (ST)

Upper secondary threshold (UST) for under 21s

Apprentice upper secondary threshold (AUST) for under 25s

Rate: 13.8% on earnings above the ST/UST/AUST

Employment allowance: £3,000 per year, per employer

Class 2 NICs:

Rate: £3.05 per week

Small profits threshold: £6,475

Class 3 NICs:

Rate: £15.30 per week

Class 4 NICs:

Rate on profits between lower and upper limits: 9%

Rate on profits exceeding upper profits limit: 2%.

In announcing the rates, the former Chancellor confirmed the government commitment to keeping tax low to ensure people keep more of what they earn. Ministers have pledged that the rates of income tax, National Insurance and VAT will not rise, and the government has set out an ambition to raise the National Insurance thresholds to £12,500, putting almost £500 a year into people's pockets.

Get a fixed quote

Fixed prices for agreed services

FAIR FEE POLICY. We believe you should always be in control of your fees with no surprises. You are entitled to a competitive fixed quote for agreed services, which is exactly what we charge, not a penny more. Most clients choose this option although if you prefer to pay an hourly rate we can arrange that too.

To receive a fixed quote for your specific circumstances either arrange a Free No Obligation Consultation or submit the form below. The form is designed for most of the routine accountancy services. If you require something more specialist, please contact us directly. If necessary we will contact you for further information.

If you are a new start up business, please use estimates. Full quotes are provided within 2 working days.

FIXED QUOTE REQUEST FORM »

Make more, keep more, work less

Get the right advice and take action

MAKE MORE

Have clear goals including long, medium and short term for what you want to achieve and develop a roadmap to get you there... read more »


KEEP MORE

Use our Tax Planning Service to ensure you don’t pay a penny more in tax than is necessary... read more »


WORK LESS

Work ON your business and not IN your business - work ON your systems so the systems run the business and your people run the systems, leaving you free to have more holidays... read more »

Start Up

Are you looking to start a new business?

Choose your business size to see how we can help you

Small

Key points for our small business clients to know

Choose your business size to see how we can help you

Medium

Help and assistance for medium sized businesses

Choose your business size to see how we can help you

Large

See our extensive range of services for your needs

Choose your business size to see how we can help you