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See how much extra money you'll get after National Insurance tax cut from July 6 - CHRONICLE LIVE
From July 6, changes are being brought in on how National Insurance is calculated - and this means lower paid workers are set to get extra money in their pockets. Under the plan announced in March by Chancellor Rishi Sunak, from that date the threshold at which workers start paying National Insurance will increase by £3,000.
It means less of workers’ income will be subject to National Insurance as they will earn up to £12,570 a year before they pay it - a sharp increase from the current rate of £9,880. This is meant to counteract an earlier decision by Sunak to increase income tax contributions by 1.25 per cent to raise money to deal with the huge hole in public finances caused by Covid.
The cost of living crisis including massively increased energy costs for power and fuel led the chancellor to try to help. It has been estimated that 30 million workers will benefit and an extra 2.2 million people will not have to pay NI at all. The Government website has a special tool on it for people to input key wage information and then it will give you an estimate of how much less you’ll pay. To use it.
Generally speaking it means workers won’t pay national insurance or income tax if they earn below £12,570 a year. If you earn more than this, they will still feel the benefit and pay less National Insurance overall due to the higher threshold.
Estimated contributions to National insurance:
Salary | National insurance costs 2021/2 PA | Est National insurance costs after July 6 |
£20,000 | £1,340 | £984 |
£30,000 | £2,451 | £2,309 |
£40,000 | £3,651 | £3,634 |
£50,000 | £4,851 | £4,959 |
£60,000 | £5,078 | £5,311 |
It means that someone earning £20,000 would take home an extra £30 per month, depending on things like pension contributions and other things like marriage and student loans that affect your overall take-home pay. Someone earning £40,000 in the same situation, meanwhile, would take home an extra £29 per month. The extra amount - £29 - is the same even if you earned £100,000, according to the calculator.
But over the course of a year, the savings roll into the hundreds of pounds, which is certainly welcome at a time inflation is tracking at 9%. Not everyone was keen on the change, though, saying it doesn't go far enough, reports Bristol Live.
Gareth Frost said: "Pay is 10 more a month. But since April have had less cos of hike. So works out about same as before. Not forgetting everything has gone up so am severely worse off. Sunak has no clue. They will spin this as a big tax cut tho I bet."
