Income boost for some as National Insurance threshold increases

Millions of people throughout the UK will see the pay they take home each month rise as changes to National Insurance contributions take effect.

The plan, announced by former chancellor Rishi Sunak in March, comes into action from Wednesday and will see the threshold at which people pay NI increase to £12,570.

Scottish secretary Alister Jack said the changes would see 2.4 million workers north of the border “typically save around £330 a year”.

“We’re acutely aware of global issues raising the cost of living and this is part of a £37bn UK Government support package to ensure people keep more of their earnings,” the MP added.

But the move followed a controversial 1.25 percentage point increase in NI in April which came amid a string of other bill hikes, including a jump in the energy price gap.

The starting thresholds will rise from £9,880 with the UK Government claiming around 30 million workers will benefit.

Seven in 10 (70%) workers who pay National Insurance contributions (NICs) will pay less, even after accounting for the health and social care levy.

Of those who benefit from the threshold increase, 2.2 million people will be taken out of paying NICs altogether, it added.

Anyone earning less than around £35,000 will see their pay packet return to roughly the same level it was before April.

Laura Suter, head of personal finance at AJ Bell, said: “From July 6, millions of people will see their national insurance bills cut, as the threshold at which people start paying the tax is raised to £12,570.

“The move means that most people on an annual salary of up to £12,570 will pay no income tax and no national insurance.”

Ms Suter added: “The (UK) Government has heralded July’s change as a cut in tax, that will save the average worker £330 a year, but millions of people will actually be paying hundreds of pounds more in taxes when compared to the previous system.”