Inflation is at its highest rate for four decades (Dominic Lipinski/PA)
(Picture: PA Wire)The national insurance thresholds have changed, reducing the tax bill of millions of workers.
The government announced the changes in the Spring Statement to help with the cost of living crisis, and it is thought that the average worker will save around £330 a year.
The increase in the threshold will benefit around 30 million people, according to the HM Treasury, which said that around 2.2 million workers will no longer have to pay national insurance.
However, while the thresholds will increase, so has the rate, which has gone up by 1.25 percentage points. People who earn up to around £34,000 will be better off following the changes, but those earning more will lose out.
But when did the national insurance thresholds come into effect? Find out everything you need to know below.
What is national insurance?
National insurance is a payment people make to qualify for certain benefits and the state pension. People pay national insurance if they are 16 or older and are either an employee earning above £190 a week or self-employed and making a profit of £6,725 or more a year.
When does the national insurance threshold change?
The national insurance threshold changed on July 6, 2022.
What are the new national insurance thresholds?
The weekly primary threshold for employees will increase from £190 to £242, and the monthly threshold will increase from £823 to £1,048.
For self-employed people, the small profits threshold will increase from £6,515 to £6,725, and the rate per week will increase from £3.05 to £3.15.
The lower profits limit for self-employed people paying class 4 national insurance will increase from £9,568 to £11,908.
Why is the government increasing the national insurance rate?
Former health secretary Sajid Javid told Sky News: “When we spend money on public services, whether it’s the NHS or anything else, the money can only come from two sources. You raise it directly from people today through taxes or you borrow it, and then essentially you are asking the next generation to pay for it.
“I think it is right that we pay for what we are going to use as a country, but we do it in a fair way. The way it is going to be raised is the top 15 per cent of earners will pay almost 50 per cent, and I think that is the right way to do this.”
