The threshold for when you start to pay the tax will go up next month
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Changes to your National Insurance contributions are coming into force in July – and millions of people will get a pay rise. On July 6, the threshold for when you start to pay NI will go up from £9,880 to £12,570.
As a result, around two million low-income workers will pay no National Insurance at all, while millions more will see their tax bill reduced. The amount of extra money you get will depend on how much you earn.
The rate at which you pay contributions was raised by 1.25 percentage points in April. This meant millions more people saw their NI bill rise at the start of the new tax year, reports The Mirror.
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However, earlier this year Chancellor Rishi Sunak said seven out of 10 people will be paying less for NI from July even with the 1.25 percentage point increase to the contributions.
It is estimated that those who earn roughly £35,000 will see their NI contributions fall compared to last year after the threshold is changed on July 6.
The Government has set up a new calculator that shows how much more of your wage you'll keep once the changes are introduced next month. The calculator uses your salary information to give you an idea of how much you'll save if you pay tax through PAYE.
The Chancellor also announced in his Spring Statement that he was going to cut Income tax by 1p – but not until April 2024. The basic rate on income tax – which is a tax you pay on your earnings above a certain threshold – is currently 20p, and this will drop to 19p next year. For most people, the personal allowance before you start paying income tax is £12,570.
After the NI changes, the new Gov.uk calculator estimates that a taxpayer earning £18,000 would save an extra £310 a year. Someone earning £20,000 a year would be £291 a year better off and a taxpayer on £30,000 would save £197. However, a higher earning person on a £50,000 salary would save just £10 – and anyone earning £100,000 per year would pay £459 more.
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