What impact will the rising National Insurance threshold have on your payslip?
SOME people's July payslips may look better than they did last month, as the threshold at which National Insurance (NI) kicks in will be raised from today. Here is a look at what is happening:
- What is happening?
NI starting thresholds will rise from £9,880 to £12,570 from July 6, meaning many people will see more money in their pay packets from this month.
- Will I be better off?
That depends on how much you earn and whether it was enough to meet the previous threshold. Nearly 30 million working people will benefit, with a typical employee saving over £330 in the year from July, according to the UK Government.
However, the cut follows a 1.25 percentage point increase to NI in April, to help pay for health and social care.
The Government says seven in 10 (70 per cent) workers who pay National Insurance contributions (NICs) will pay less, even after accounting for the health and social care levy.
With everyday prices such as food and fuel rising sharply, some households may not feel better off in practice, even with more money in their pay packet.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: "Lower earners will pay less and higher earners will pay more than they did before April."
According to Hargreaves Lansdown, someone earning £20,000 would have had a monthly NI bill of around £104 before April, which then rose to £112 and will drop to around £82 following the July changes.
Someone on £30,000 would have paid around £204 per month before April, then rising to £222 and they will now see this fall to around £192.
On a £40,000 salary, they would have paid around £304 per month before April and seen this rise to £333. This will now fall to around £303.
Someone on £50,000 will pay around £413 per month from July, up from around £404 before April, and someone earning £60,000 will pay around £443 from July, up from £423 before April, according to Hargreaves Lansdown.