HUNDREDS of workers will get a pay rise next month due to a National Insurance threshold rise.
It means the average worker will get £30 a month or £360 extra.
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The amount you’ll get will vary based on how much you earn.
In March, the Chancellor announced that the threshold that workers pay National Insurance will rise from £9.500 a year to £12,500 from July.
This means workers saw their pay packets drop in April – but will see payments rise again after July’s threshold changes kick in.
However, it comes after a National Insurance hike on April 6, which saw millions paying extra.
Before April 6, most workers – who earn between £9,568 and £50,270 a year – paid 12% National Insurance.
But now those workers pay 13.25%. Anyone earning over £50,270 pays 3.5% on the amount over this threshold, up from 2%.
It means a worker earning £20,000 a year would see their tax home pay rise from £1,431 a month to £1,461 in July – an extra £30 a month or £360 a year.
Not all workers will benefit from the changes, experts have warned.
Sarah Coles from Hargeaves Lansdown said: “The good news is that this is as bad as it’s going to get for National Insurance for a while, and the pain will ease slightly in July for some.
“Overall, anyone earning around £35,000 or less will pay less National Insurance this year than last year.”
If you want to calculate how much your wages will be affected then MoneySavingExpert’s take home pay calculator can help you work it out.
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 or over and either:
- an employee earning above £184 a week
- self-employed and making a profit of £6,515 or more a year
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.
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