The rates of NIC remain unchanged. An increase is expected in 2011, but no further details of this were given in the Budget.

The upper earnings limit, at which employee contributions drop from 11% to 1%, has increased substantially this year in order to align it with the level at which higher rate income tax is payable.

Because different amounts are subject to income tax and NIC (e.g.savings income, which is not charged to NIC), it will be rare for the thresholds to coincide exactly. What is certain is that the increase in the upper earnings limit will significantly increase the NIC payments of high earners: a higher proportion of their pay will be charged at 11% instead of 1%.

A new threshold has also been introduced for 2009/10. The "upper accrual point" is the top limit for those on contracted-out pensions to enjoy the contracting out rebates. For example, an employee with a salary-related contracted-out scheme will pay 9.4% NIC on earnings between £110 and £770 a week, then 11% on earnings between £770 and the upper earnings limit of £844, then 1% on any earnings above that.

These two changes together mean that the rates of NIC may be unchanged, but the amounts of NIC deducted from the pay of high earners will increase sharply between March and April. For example, a contracted-out employee earning £4,000pm will pay £307 rather than £277 - an increase of 10%.