A change in N.I contribution levels in July
A change in National Insurance contribution (NICs) levels comes into force at the beginning of July, which should save around 30m people £330 each, according to the Government.
From July 6, the amount you can earn before you start paying NICs will increase, which means the amount of overall tax – since NICs is a tax in all but name – will reduce.
What are the new thresholds?
From July 6, the threshold for Class 1 NICs, which are paid by those who are employed, and Class 4 NICs, which are paid by the self-employed, rises from £9,880 to £12,570. This means you can earn an additional £2,690 before you need to start paying NICs.
The new NICs threshold is now in line with the starting point for income tax, but the NICs rate you will pay has not changed and still includes the 1.25% addition for the Health and Social Care Levy made earlier this year.
So, everything you earn between £12,570 and £50,270 will be charged NICs at 13.25%.
Anything above this higher threshold will be charged at 3.25%.
How much will you save?
If you want to find out how much more money you will have in your pocket thanks to the change in the NICs thresholds, the Government has created a handy calculator that you can use to determine what you will save on this Government website. But if you are self-employed, this calculator will not work for you, so you are best to contact your accountant to find out what the change means for you.
