increase of National Insurance Contribution allowance for Company Directors
Following the start of the new financial year, some of the NIC rates and thresholds have changed compared to 21/22, including the increase of the NIC allowance for Directors. The threshold has been increased from £9,569 to £11,908 per year.
However, where a director is also a founder or shareholder, the NIC will still be a cost, although lower: the secondary threshold, which is the amount above which the NIC is calculated (at 15.05%, in 21/22 it was 13.8%), has been increased from £8,840 to £9,100, therefore there is a gap of 2,808£ subject to NIC.
This is still a relatively small amount compared to the advantage that would be enjoyed by adding 2,339£ tax free directly to the payroll: the difference between 15.05% and the secondary threshold adds up to £422.20 annually, just over 35£ per month (on average). The company will be paying this liability between January through March, since the Directors’ NIC deduction is based on the exhaustion of the allowance from the start the financial year rather than a monthly roll out like for standard employees.
