NIM01615 - Class 1 structural overview from 6 April 2009: 2022 to 2023 tax year only: directors blended rate
Paragraph 5 of the Schedule to the Health and Social Care Levy (Repeal) Act 2022
Section 4(2) of the National Insurance Contributions (Increase of Thresholds) Act 2022
The rate of Class 1 NICs that applies to a payment of earnings in the 2022 to 2023 tax year to employees depends on the date that the payment is made. However, because directors have an annual earnings period (or pro-rata as appropriate) then an average blended rate needs to be applied, as set out in the legislation.
The blended rate is calculated as 214 days at the rate which applied at the start of the tax year and 151 days at the rate which applied at the end of the tax year, for example, for the main primary percentage rate this is (214 / 365 x 13.25) + (151 / 365 x 12) = 12.73.
Where a director is paid using the alternative arrangements then their Class 1 NICs are calculated as if they were an employee, but the blended rates apply to the end-of-year reconciliation. Where the standard method is used then the blended rates apply for the whole of the tax year.
The blended rates for the 2022 to 2023 tax year are:
- Main primary percentage – 12.73%
- Additional primary percentage – 2.73%
- Married women and widows reduced rate – 6.58%
- Secondary percentage – 14.53%
For the whole of the 2022 to 2023 tax year a director’s Primary Threshold is £11,908 (or pro-rata of this, following the rules for pro-rata using £229 per week).
See NIM12000 for guidance about Class 1 NICs for directors.