Employee contributions between the lower and upper earnings threshold will rise to 12 percent, and to 2 percent for earnings above the upper earnings threshold.
The employer contribution rate increases from 12.8 percent to 13.8 percent. This is mitigated, to an extent, by the fact that the level at which employers will start to pay NIC will increase by £21 per week above indexation from 6 April 2011. The value of indexation will be determined by data available in the autumn.
The Government has also announced a three year scheme whereby, in targeted regions, new businesses will be exempted from up to £5,000 of class 1 NICs for each of the first 10 employees hired in their first year of business. The countries and regions that are covered comprise Scotland, Wales, Northern Ireland, the North East, Yorkshire and the Humber, the North West, the East Midlands and the South West. This is a welcome measure and will hopefully encourage the establishment of new businesses in these areas.
