Back in his Spring Statement in March of 2022, then Chancellor Rishi Sunak announced significant changes to National Insurance. The first of which came into effect in April when NI contributions were raised from 12% to 13.25%.
What is changing in July?
This month sees some respite however with the implementation of Sunak’s second change; a raise of the primary threshold for National Insurance. From July 6th this has been raised from £9880 to £12,570, bringing it in line with the personal allowance for income tax for the first time.
This change means that anyone earning less than approximately £35,000 will pay less National Insurance this year, and employees will see this change reflected in their pay this month. The Prime Minister has stated that this will mean the average worker will receive a tax cut of £330 a year. If you earn below this threshold then you will no longer pay National Insurance contributions at all. If you are a higher earner however, you will still be paying more National Insurance than you were last year.
Will this help the cost-of-living crisis?
Taxes are still at their highest rate for 40 years and the cost of living crisis continues to grow. With a new Chancellor in place it will be interesting to see what, if any, changes he makes to ease the pressure on low and middle earners. We will have a full report of the Autumn statement when it is given, and in the meantime will continue to update you as soon as anything changes.