Do tax codes affect NI?

DragonQ

Seems like a pretty simple question but can't get a straight answer from any source I've found so far. For example, my 2022-23 threshold for basic rate income tax should be £11,800 because there's the standard personal allowance of £12,570 and I have to pay tax on £770 for my salary sacrifice car - presumably I will have a tax code of 1180L. The standard NI threshold for 2022-23 is £12,570. Because of my non-standard tax code, will I start paying the basic NI rate (13.25%) on everything above £12,570 or everything above £11,800?

What about higher rate thresholds? I'm assuming I'll start paying 40% on everything above £49,500 (£11,800 + £37,700), but will my NI rate drop to 3.25% at £49,500 too?

[Deleted User]

No - it won’t. you need to look at it another way. The threshold for higher rate tax is 50270 - your 770 benefit in kind, if that’s the case, is just additional income even though the tax on it is collected through a reduction in your tax code. 

You will pay 13.25% NIC on salary up to 50270 and 3.25 % thereafter.

JGB1955

According to  Rates and thresholds for employers 2022 to 2023 - GOV.UK (www.gov.uk) you'll be paying 13.25% on everything between £8,880 and £50,270.  Above that, the 3.25% becomes payable.

[Deleted User]

JGB1955 said:

According to  Rates and thresholds for employers 2022 to 2023 - GOV.UK (www.gov.uk) you'll be paying 13.5% on everything between £8,880 and £50,270.  Above that, the 3.25% becomes payable.

It’s £9880 not £8880 and 13.25% rate - I keep doing that also!

That new rate applies to income over £12570 from July.

DragonQ

Right, so my rates & thresholds are:

IT	20%	£11,800.00
IT	40%	£49,500.00
NI	13.25%	£12,570.00
NI	3.25%	£50,270.00

Thanks.

taylornj

There is the secondary Threshold which is where the employer starts paying NI at 13.8% currently and increases to 15.05% while ignored by Employees as it's the Employer's NI.

It should also be considered, that extra 1.25% added on to the Employers costs has to come from somewhere, and that will most likely be from any wage increases, so wage are unlikely to be keeping up with inflation, as wages are suddenly going to cost the employer a lot more.

The Chancellor has done a sneaky thing, yes given back to the lower paid, but also destroyed their chances of keeping up with inflation. The true gift is to the Chancellors friends, a beaten down work force that can be exploited.