National Insurance threshold increases
The Government is increasing the threshold at which workers start to pay National Insurance contributions (NICs) by £12,570 this month – the largest increase in a basic rate threshold.
The increase in the threshold means workers can earn an extra £2,690 before having to pay NICs.
The change also brings the NIC and income tax payment thresholds in parity for the first time.
According to the Treasury, the change equates to a tax saving of over £330 for a “typical employee” and benefits almost 30 million working people.
When Chancellor Rishi Sunak announced the shake-up in the Spring Statement 2022, the NIC threshold was £9,568 and rose to £9,880 at the start of the 2022/23 financial year.
Most individuals will now pay less National Insurance in spite of the increase in rates by 1.25 percentage points.
According to the Government, 70% of those who pay NICs will pay less starting this month (July), while 2.2 million people will be taken out of paying NICs altogether.
Consumer website Money Saving Expert said those earning under £30,000 will pay less National Insurance compared with 2021/22.
If you would like to talk more about NIC changes, please contact James Alesbury on 023 8046 1222.