Rates and limits (Table D)
The percentage rates of NIC and most of the thresholds remain unchanged. There is a £2pw increase in the "lower earnings limit" to £97pw. Pay above this level has to be reported under the PAYE system and qualifies the recipient for benefits, but no NIC become payable until earnings reach the "primary threshold" of £110pw.
Last year the Chancellor announced further increases in NIC for both employers and employees, but these are not due to come into effect until 6 April 2011. The current intention is that 1% will be added to the rates of employee, employer and self-employed contributions. The primary threshold will be increased in order to compensate those on lower earnings. Only people earning £20,000 or more should pay more in NIC as a result of these increases.
These two changes together mean that the rates of NIC may be unchanged, but the amounts of NIC deducted from the pay of high earners will increase sharply between March and April. For example, a contracted-out employee earning £4,000pm will pay £307 rather than £277 - an increase of 10%.
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