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WORKERS are set for a pay rise of as much as £330 within DAYS when a change to taxes comes in.
The government is raising the amount you can earn before you start paying National Insurance contributions (NICs) to £12,570.
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This is an increase from £9,500 and you should see the change in your first pay check from July 6.
The change will save the average worker £330 a year according to Bestinvest, but this will depend on how much you earn.
For example, someone on a salary of £20,000 will pay around £291 less a year in NICs, according to the government’s calculator.
Alice Haine, a personal finance analyst, said the change means 2.2 million workers will get a complete break from National Insurance payments.
She added: “This equates to a saving of over £330 on average, when compared to the previous three months of National Insurance contributions, with the cash boost also set to benefit a further 30million typical employees earning over the new £12,570 threshold, including higher earners.”
Alice said 70% of lower to middle income earners will see their National Insurance drop below what they were paying last year.
She described it as a “mini-boost” to pay packets during the cost of living crisis.
The exact amount more you can earn without paying NICs, will depend on how much you earn.
You can use the government’s tool to check how much better off you’ll be.
Chancellor Rishi Sunak first announced an increase to the threshold in March, and some of the lowest earners will pay no NICs at all.
But it comes after a National Insurance hike on April 6, which saw millions paying extra.
The social care levy added 1.25 percentage points to National Insurance rates.
The extra cash comes as millions face soaring bills in the cost of living crisis.
But vulnerable households will receive a cash boost in the coming months, with the first of Rishi Sunak’s cost-of-living payments coming in July
This will be followed by a second instalment in the Autumn, forming part of a £1,200 support package for those hardest hit.
Every household in the UK will be given at least £400 to help cover rising energy bills, which are set to go up by hundreds of pounds more this winter.
Pensioners will get an extra £300 one-off payment during the coldest months.
What is National Insurance?
National insurance is a tax paid by workers above a certain level of earnings.
The contributions help fund benefits like the State Pension, sick pay and unemployment benefits.
All UK nationals receive an NI number (and NI card) automatically before they turn 16.
Your NI number helps the government track your earnings and charge the right amount of tax.
You currently pay National Insurance if you’re 16 and earn over a certain amount.
Workers currently pay 13.25% on earnings between £9,564 and £50,268 and a further 3.25% is paid on wages over that.
The tax is deducted from your wages each month and you can see how much you pay on your payslip.
Once you reach state pension age, you don’t need to pay National Insurance at all.National Insurance is not the same as income tax, and you pay this separately on your earnings too.
National Insurance works differently if you’re self-employed.
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