[UK] How changes to NI this month will impact pay

Millions of workers will get a pay rise later this week as changes to when National Insurance (NI) must be paid come into force, Mirror reports.

The threshold for individuals to start to pay NI will rise from £9,880 to £12,570 on July 6, 2022.

The change means around two million low-income workers will pay no NI at all and millions more will see their tax bills reduced.

Exactly how much more money workers could get in their pay packet will depend on how much they earn.

The changes to the NI threshold come after the rate at which contributions are paid was raised by 1.25 percentage points in April.

This meant millions more workers saw their NI bill rise at the start of the new tax year.

Earlier this year, Chancellor Rishi Sunak said seven out of 10 people will be paying less for NI from July even with the 1.25 percentage point increase to the contributions.

It is reportedly estimated that those who earn in the region of £35,000 will see their NI contributions fall compared to last year, after the threshold is changed on July 6.

The UK Government has launched a calculator that shows workers how much more of their wages they will keep once the changes are in force.

The new calculator uses salary information to estimate how much will be saved by paying tax through PAYE.

The Chancellor also announced in his Spring Statement that he intended to cut Income tax by 1p in April 2024.

The basic rate of income tax is currently 20p, this will drop to 19p next year.

The personal allowance before you start paying income tax is £12,570 for the majority of people.

What is National Insurance?

National Insurance is a tax on earnings, paid by both employed and self-employed workers.

Mandatory NI is paid by anyone 16 or over who is either an employee earning above £190 a week or self-employed and making a profit of £6,725 or more a year.

Once individuals reach state pension age they no longer need to keep paying NI.

People with an employer, or those who are self-employed but work for an employer, will pay Class 1 NI contributions.

The amount paid on NI is then worked out based on gross earnings, before tax or pension deductions, above certain thresholds.

The new Gov.UK calculator estimates that a taxpayer earning £18,000 would save an extra £310 a year.

Someone earning £20,000 a year would be £291 a year better off and a taxpayer on £30,000 would save £197.

By contrast, a high earner on a £50,000 salary would save just £10 and anyone earning £100,000 per year would pay £459 more.

Source: Mirror

(Link via original reporting)

Millions of workers will get a pay rise later this week as changes to when National Insurance (NI) must be paid come into force, Mirror reports.

The threshold for individuals to start to pay NI will rise from £9,880 to £12,570 on July 6, 2022.

The change means around two million low-income workers will pay no NI at all and millions more will see their tax bills reduced.

Exactly how much more money workers could get in their pay packet will depend on how much they earn.

The changes to the NI threshold come after the rate at which contributions are paid was raised by 1.25 percentage points in April.

This meant millions more workers saw their NI bill rise at the start of the new tax year.

Earlier this year, Chancellor Rishi Sunak said seven out of 10 people will be paying less for NI from July even with the 1.25 percentage point increase to the contributions.

It is reportedly estimated that those who earn in the region of £35,000 will see their NI contributions fall compared to last year, after the threshold is changed on July 6.

The UK Government has launched a calculator that shows workers how much more of their wages they will keep once the changes are in force.

The new calculator uses salary information to estimate how much will be saved by paying tax through PAYE.

The Chancellor also announced in his Spring Statement that he intended to cut Income tax by 1p in April 2024.

The basic rate of income tax is currently 20p, this will drop to 19p next year.

The personal allowance before you start paying income tax is £12,570 for the majority of people.

What is National Insurance?

National Insurance is a tax on earnings, paid by both employed and self-employed workers.

Mandatory NI is paid by anyone 16 or over who is either an employee earning above £190 a week or self-employed and making a profit of £6,725 or more a year.

Once individuals reach state pension age they no longer need to keep paying NI.

People with an employer, or those who are self-employed but work for an employer, will pay Class 1 NI contributions.

The amount paid on NI is then worked out based on gross earnings, before tax or pension deductions, above certain thresholds.

The new Gov.UK calculator estimates that a taxpayer earning £18,000 would save an extra £310 a year.

Someone earning £20,000 a year would be £291 a year better off and a taxpayer on £30,000 would save £197.

By contrast, a high earner on a £50,000 salary would save just £10 and anyone earning £100,000 per year would pay £459 more.

Source: Mirror

(Link via original reporting)