Increase in NIS Insurable Wage Ceiling
April 2021 – increase in insurable wage ceiling for the national insurance scheme
If you see National Insurance Scheme (NIS) being deducted from your gross pay, as of April 2021 expect to see an increase in the amount being deducted IF you earn more than the insurable wage ceiling of of $125,000 per month. The insurable wage ceiling just dictates the maximum amount of gross income that can be assessed for the purpose of calculating the NIS deduction.
See related article: “Why Pensions are Important” to understand more about NIS and why it is deducted from your salary each month.
What has changed?
If you earn more than $125,000 per month you will see $3,750 being deducted from your salary (if your employer pays taxes on your behalf). Well as of this month (April 2021) you will see that amount double to $7500 if you earn $250,000 or more per month. In other words, more of your gross pay will go towards NIS deductions as the insurable wage ceiling has increased to $3 million per annum ($250,000 per month). The image below outlines the changes in the NIS Deductions calculations from April 2019 to April 2022 where it is expected to increase again to $5 million per annum.
NIS is currently 3% of income up to the max of $7,500. As such, you will see 3% of your gross income being deducted and paid over to the NIS and the other 3% is paid by your employer.
If you earn less than $500k and more than $250k per month it will decline by $2,728 and if you earn over $507,500 then it will decrease by $2,540. Otherwise it varies.
Check out my Net Pay Calculator here financialcentsibility.com/calculators/ to calculate exactly how much your Net Pay will change by because of the change to the NIS insurable wage ceiling. Remember it is expected to change again in April 2022.