THOUSANDS of workers will earn more cash as of July, will you be one of them?
A huge change to National Insurance will happen on July 6, and that could mean a boost to your income.
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Employees won’t start paying National Insurance Contributions (NICs) until they earn at least £12,570.
That means you can earn more without paying the tax because the current threshold is £9,500.
The exact amount of contributions you make depends on how much you earn. The lower your wage, the lower the amount you pay.
Now you can see how much you’ll stand to save when the NIC threshold increases – and it couldn’t be easier.
The government has created a handy online calculator to do the sums for you.
To workout how much you’ll save just go onto the website and enter your annual salary to receive an estimate.
Some employees will pay nothing at and will no longer be paying NIC’s at all.
Some could save hundreds of pounds while the highest earners will only save £10.
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To help you calculate if you’ll have any changes to your NICs payments, we’ve rounded up some estimates for you:
- £10,000. Currently paying: £43.35. New estimate: £0. Savings: £43.35.
- £15,000. Currently paying: £658.98. New estimate: £321.12. Savings: £337.86.
- £20,000. Currently paying: £1,274.61. New estimate: £983.64. Savings: £290.97.
- £25,000. Currently paying: £1,890.16. New estimate: £1,646.16. Saving: £244.
- £50,000. Currently paying: £4,968.36. New estimate: £4,958.64: Saving: £10
You can use this tool if you receive the same pay each month and are paid through the PAYE system.
PAYE stands for Pay As You Earn. This system allows HMRC to track income tax and NICs.
However, the calculator can only provide a rough estimate. Your result may be affected by various working arrangements from the period between 6th July 2021 to 5th July 2022.
These factors include whether you’re self-employed, work outside the UK or you’re over state pension age.
Plus your pay and NICs can be affected by commission or if you’re paid weekly.
What is National Insurance?
National Insurance is a tax paid by employees aged 16 and over who receive certain level of earnings.
The tax helps fund benefits including state pension, sick pay and unemployment benefits.
Every UK citizen receives an NI number automatically before turning 16.
The number helps the government track your earnings and ensures you pay the right amount of tax.
Employees pay 13.25% on earnings between £9,564 and £50,268. If you earn over £50,268 you’ll be taxed an extra 3.25%.
You can find out how much you’ve been taxed by checking your pay slip each month.
If you’re self-employed, National Insurance works differently. If you’re over state pension age, you won’t pay it all.
Am I able to receive more financial help?
The Government has announced a package of measures to help households during the cost of living crisis.
Chancellor Rishi Sunak announced earlier this year that Brits will get up to £400 off their energy bills as part of a £21 billion cost of living bailout.
Additional payments of up to £650 will be given to those most vulnerable, pensioners or disabled. These payments are grants, not loans and therefore don’t need to be paid back.
This package was announced after it was revealed household energy bills are expected to rise up to £2,800 in October.
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