MILLIONS of workers are set for a bumper pay rise worth £450 a year from today.
The Government has slashed the main rate of primary Class 1 National Insurance Contributions (NICs) from 10% to 8%.
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It comes after ministers cut the same rate of NICs from 12% to 10% in January following an announcement in the Autumn Statement.
Both cuts considered, it means a worker on an average annual salary worth £35,000 will be £900 better off a year from today.
In total, 27million workers will see their pay rise go up.
Meanwhile, two million self-employed people will also be on average £650 better off a year after Class 4 NICs were cut by one percentage point and then two percentage points last Autumn and this Spring, respectively.
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The Government’s latest decision to cut Class 1 NICs came during the Spring Budget, which included a swathe of other announcements.
The Chancellor also confirmed a six-month extension to the Household Support Fund, while alcohol duty was frozen until February next year.
The High Income Child Benefit Charge was also raised from £50,000 to £60,000, with the upper threshold rising to £80,000.
How much better off will I be?
How much better off you’ll be after today’s cuts to NICs depends on how much you earn.
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However, tax experts at Blick Rothenberg did previously share a calculator with The Sun which will tell you.
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Data from AJ Bell recently shared with The Sun also shows what workers on specific salaries will see their pay rise to.
For example, a worker on £25,000 a year will see their income boosted by £248.60 a year.
Meanwhile, someone on an annual salary of £50,000 will see their pay go up by £748.60 a year.
What is National Insurance?
National Insurance (NI) is a tax on your earnings which is used to pay for state benefits such as the state pension.
If you are a UK national, you should receive an NI number and card before you turn 16, although you may have to apply.
This number allows the Government to track your earnings and apply the right amount of tax.
You start paying National Insurance if you’re 16 or over and either:
- An employee earning above £242 a week
- Self-employed and making a profit of more than £12,570 a year
Your employer takes it from your wages each month before paying you.
If you’re employed, you can see your contributions by looking at your payslip.
Once you’ve reached state pension age, currently 66, you stop paying National Insurance.
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There are different types of National Insurance, known as “classes”, and the type you pay depends on your employment status, how much you earn, and whether you have any gaps in your National Insurance record.
For example, Class 1 NICs, falling to 8% from today, are paid on earnings over £12,570 and below £50,271.
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