National Insurance Contributions (NI)
No changes to the rates of NI contributions were announced in the Budget.
The primary and secondary thresholds (at which employees and employers, respectively, start to pay NI) have been increased to £148 and £149 per week respectively.
The upper earnings (or profits for the self employed) limit is £41,450, aligned with the point at which 40% tax becomes payable.
Comment: For those of you paying yourselves the National Insurance limit, this means that you should increase your pay to £7,696 per annum (£641.33 per month) from April.
Details of the rates of NI for 2013-14 can be found at http://www.hmrc.gov.uk/rates/nic.htm
An allowance of £2,000 per annum will be introduced for all businesses and charities to be offset against their employer NI liability from April 2014 – this effectively takes away the first £2,000 of the employer’s NI bill of every company.
This is being funded by the extra NI that will be due from employers with employees formerly contracting out of the second state pension – employer’s previously paid a reduced rate of NI to reflect the fact that employees were not entitled to second state pension. With the introduction of the single tier pension, contracting out is no longer relevant and their NI will revert to the standard rate.
Exemption threshold for employer provided beneficial loans
The threshold for employment-related taxable cheap loans to be treated as earnings of the employment will increase from the current threshold of £5,000 to £10,000 from 6 April 2014. As long as the total outstanding balances on all such loans do not exceed the threshold at any time in a tax year, there is no tax charge.