Income Tax allowances and NIC thresholds frozen until 2028
The thresholds at which you pay income tax and national insurance will not change from April 2023 (tax year 2023/24) to April 2028 (tax year 2027/28).
From 2023/24 to 2027/28, the Personal Allowance for Income Tax, Primary Threshold for class 1 National Insurance, Lower Profits Limit for class 4 NI and the Lower Profits Threshold for class 2 NI will remain at £12,570 per year.
Rates are as follows above this threshold:
- 20% basic rate income tax
- 9% self-employment national insurance class 4
- Flat rate of £3.45 per week for self-employment national insurance class 2 (see below)
From 2023/24 the Higher Tax limit for income tax (40%), Upper Earnings Limit for class 1 NI and Upper Profits Limit for class 4 NI will remain at £50,270 per year.
All of these changes will apply across the UK apart from the Higher Rate Tax limit which will not apply in Scotland.
Class 2 NI payments (self-employment)
From 2023/24 the Small Profits Threshold for class 2 NIC will be £6,725 per year. If your profits are below this threshold you do not have to pay class 2 NIC
Profits between £6,726 and £12,570 will not have to pay class 2 NIC but are treated as having made Class 2 NIC without needing to pay this gives a year credit towards your state pension.
Profits of £12,571 and above will have to pay class 2 NIC at a rate of £3.45 per week collected as one annual payment as part of your self-assessment.
Additional Rate Threshold change
From April 2023 (tax year 2023/24) higher earners will start paying the Additional Rate of tax (45%) on earnings above £125,140. Previously this threshold was £150,000.
This will apply in England, Wales and Northern Ireland.
