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National Insurance thresholds to rise in April 2020
4th February 2020
The National Insurance Contribution (NIC) threshold will rise on 6 April 2020 as part of the government’s commitment to reduce contributions by the low paid.
For 2020/21 the threshold at which taxpayers start to pay NICs will rise to £9,500 per year for both employed (Class 1) and self-employed (Class 4) people.
The increase in the primary threshold and the lower profits limit is a step towards the government’s aim to raise these amounts to £12,500 per year to align them more closely with the income tax personal allowance.
Whilst the Class 1 primary threshold and Class 4 lower profits limit will increase, the upper limits will stay the same, although other thresholds will see an inflationary rise.
The government says it is keeping to its manifesto promise not to increase the rates of income tax, NICs and VAT.
The threshold increases will not affect entitlement to contributory benefits such as the State Pension.
Also from April 2020, a number of working-age benefits will rise in line with inflation.
Termination Payments
Additionally from 6 April 2020, Class 1A (employer only) NICs are introduced on termination payments over £30,000.
Apprenticeship Levy
No announcement has of yet been made about the apprenticeship levy for payrolls over £3m. For the moment it continues at 0.5 per cent of payroll costs, and the levy allowance remains at £15,000 a year.
| Class 1 | 2020/21 | 2019/20 |
| Lower earnings limit | £120 per week | £118 per week |
| £520 per month | £512 per month | |
| £6,240 per year | £6,136 per year | |
| Primary threshold | £183 per week | £166 per week |
| £792 per month | £719 per month | |
| £9,500 per year | £8,632 per year | |
| Secondary threshold | £169 per week | £166 per week |
| £732 per month | £719 per month | |
| £8,788 per year | £8,632 per year | |
| Upper earnings limit | £962 per week | £962 per week |
| £4,167 per month | £4,167 per month | |
| £50,000 per year | £50,000 per year | |
| Class 2 | ||
| Weekly amount | £3.05 | £3.00 |
| Small profits threshold | £6,475 | £6,365 |
| Class 3 | ||
| Weekly amount | £15.30 | £15.00 |
| Class 4 | ||
| Lower profits limit | £9,500 per year | £8,632 per year |
| Upper profits limit | £50,000 per year | £50,000 per year |
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