Employers’ NI 1% rate increase dropped
Frozen. One Conservative promise that will still be honoured under the new “Coalition Agreement” is that the planned 1% increase in employers’ National Insurance (NI) contributions will be scrapped (see The next step). It had been described as a “tax on jobs” at a time when businesses were starting to feel confident about recruiting again. So the current rate of 12.8% will remain in force for now.
Employee increase. Whilst this is good news for you, the planned increase to employee NI contributions is still going ahead; this will be introduced from April 6 2011. However, if an employee asks you what’s happening, you can explain that although this rate will rise, it will be partially absorbed by a higher personal tax allowance. The government says it will be increasing this to £10,000 for lower and middle income earners, but this is likely to occur in stages. We’ll update you as soon as we have more news.
For further information on the Coalition Agreement, visit http://personnel.indicator.co.uk(PS 12.12.08).