Change to NI threshold comes into effect

The level at which people start paying National Insurance (NI) has risen to £12,750, reducing contributions for 70% of UK workers and bringing the threshold in line with that for Income Tax.

The policy came into effect on 6th July, after having been announced by former Chancellor of the Exchequer Rishi Sunak in his Spring Statement in April in response to the rising cost of living.

The average worker is expected to save around £330 per year in NI contributions, with 2.2 million lifted out of the tax altogether; the previous threshold was £9,880.

The personal tax cut also comes as the government launched new Help for Households campaign designed to raise awareness and signpost people to the £37 billion in support on offer and targeted at those most in need. The support provides millions of the most vulnerable households at least £1,200 of support in total this year to help with the cost of living, with all domestic electricity customers receiving at least £400 to help with their bills.

Despite the rate of National Insurance contributions increasing to support health and social care services recover after the pressures of the pandemic, the government estimates the increase to the NI threshold will leave around 75% of taxpayers in the North-west better off following the changes.

Workers can check their salary in the government’s online tool to estimate the amount they could save between July 2022 to July 2023.