MARTIN Lewis has explain who wins and loses from the National Insurance changes happening today.
National Insurance rates have risen, adding hundreds to tax bills, but another change this summer will cancel out the hike for some people.
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The amount of National Insurance you have to pay is rising by 1.25 percentage points from today (April 6).
That means most workers will pay 13.25% tax on their earnings rather than the previous 12% rate.
For some employees, this will add hundreds of pounds to their tax bills.
But the government will hike the National Insurance thresholds in July, meaning workers will be able to earn more before they have to pay the tax.
The earnings level at which people start paying the tax will be raised from £9,500 to £12,500.
This will effectively taking some workers out of the hike, and cancel the increase for others.
“Those two things interact quite strongly,” Martin said on BBC Radio 5 Live this afternoon.
The threshold is rising by £3,000, meaning workers can earn that much extra without being taxed – that works out at a £360 a year gain.
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Martin said it’s important to find the “balance point” between the two policies.
“At what point do you lose more because of the 1.25 percentage point increase compared to what you gain from the threshold rise,” he said.
He said it will depend on individual circumstances, but the balance point is “somewhere between £35,000 and £40,000”.
If you earn £35,000 or below, you should pay less National Insurance this year.
But if your annual salary is £40,000 or higher, you’ll probably have to pay more.
The more you earn, the higher your tax bill will be, but the actual amount will depend on personal circumstances.
Martin previously shared a video explaining the break even point following the threshold announcement in the Spring Statement last month.
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