Millions of Brits to get a pay boost as NI threshold increases

128
2
Millions of Brits to get a pay boost as NI threshold increases

Millions of Brits will get a little boost in pay packets this month as they struggle with rising living costs, because of the threshold at which people pay National Insurance NI will increase.

The UK Government has previously said that this will benefit nearly 30 m working people, with a typical employee saving over 330 in the year from July.

The move follows a 1.25 percentage point increase in the NI in April to help pay for health and social care, which came amid a string of bill hikes, including a jump in the energy price gap.

Seven out of 10 70 per cent of workers who pay National Insurance contributions NICs will pay less, even after accounting for the health and social care levy, the Government said previously.

It added that 2.2 m people will be taken out of paying NICs by those who benefit from the threshold increase.

Alice Haine, an investment analyst at Bestinvest, said a 330 saving won't stretch far when you consider that it only equates to 27.50 a month. She continued: Yes, every penny counts in this cost-of-living crisis and for some it could be the difference between having dinner every night and sometimes going without.

It will barely make a dent in their budgets as they struggle to pay the household bills due to the rising food, fuel and energy prices. Ms Haine said: All of this is set against a backdrop of falling real wages where runaway inflation is eroding any pay uplift workers receive, so any saving will quickly be swallowed up.

The threshold for NI was raised in April from 9,568 to 9,880, with the main rate for employees rising to 13.25% from 12%, as the Government tried to bolster the NHS and social care by introducing a 1.25 percentage point health and social care levy.

The NI bill is going to be cut by more than the amount they pay through the 1.25 percentage point levy, so those on lower to middle incomes with less than 35,000 are the biggest gainers this month. She said higher earners will still end up paying more in the future.

As wages go up, more people are paying higher tax bills because of frozen income tax thresholds.