From today (July 6), many people will start to see a boost in their pay packets as the threshold at which people pay National Insurance (NI) increases.
The move follows a controversial 1.25 percentage point increase in NI in April, to help pay for health and social care, which came amid a string of other bill hikes, including a jump in the energy price gap. NI starting thresholds will rise from £9,880 to £12,570 as of today.
The UK Government has previously said this will benefit nearly 30 million working people with a typical employee saving over £330 in the year from July. Seven in 10 (70%) workers who pay National Insurance contributions (NICs) will pay less, even after accounting for the health and social care levy, the Government said previously.
READ MORE: DWP warns of 'potential delays' to £326 cost of living payments
Of those who benefit from the threshold increase, 2.2 million people will be taken out of paying NICs altogether, it added. However, Alice Haine, personal finance analyst at investment platform Bestinvest, said a £330 saving "won't stretch far when you realise that only equates to £27.50 a month".
She continued: "Yes, every penny counts in this cost-of-living crisis and for some, that £27.50 could be the difference between having dinner every night and sometimes going without. For others, however, that amount will barely make a dent in their budgets as they struggle to pay the household bills amid rampant inflation as soaring food, fuel and energy prices become the norm."
A simple tool on the Gov.uk website shows people how much they can expect to save on their National Insurance payments. You can find it here.
For example, someone earning the UK average of £24,600 can expect to see their National Insurance contributions reduced by £248 a year, or just over £20 each month.
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