The National Insurance threshold has changed for taxpayers in the UK. This means that the amount an individual can earn before paying National Insurance will rise, in a move outgoing Chancellor of the Exchequer Rishi Sunak approved earlier in the year.
While this means that, according to the former Chancellor, 30 million taxpayers will pay less, it’s important to note that the government also increased the rate of National Insurance from 12% to 13.25% at the start of this tax year. Some people will therefore still be paying more overall than they were before that increases came in.
National Insurance is a tax that helps support the welfare state, including benefits, pensions, Jobseeker’s Allowance and payments for maternity leave. You will pay a different amount depending on your earnings, employment status and other factors.
Read more: How Spring Statement 2022 will affect Scottish households as national insurance threshold increases
By how much is the NI threshold increasing?
The new National Insurance threshold for Class One NI contributions from today will be £12,570, an increase of £2,690 (the previous figure being £9,880). It means workers will not pay National Insurance on their earnings up to that amount.
MoneySavingExpert's Martin Lewis tweeted out a link to a calculator the organisation has developed to see how much you will be affected by the NI changes. He wrote: “How much will you take home in July, after the National Insurance (NI) threshold rises - use this calc to find out... https://moneysavingexpert.com/tax-calculator/
“It also shows the hit of the 1% point NI rise that came in April, and compares with past tax years to see if you’re better or worse off.”
Why is the National Insurance threshold increasing?
The government has said that the National Insurance rate rise was initially necessary to help the NHS tackle the backlog caused by the Covid-19 pandemic and fund future changes to social care via the Health and Social Care Levy. Despite facing pressure to scrap the increase amid the current cost of living crisis, the government instead decided to make changes to the threshold in a bid to help those on lower incomes.
