Martin Lewis shares the wage you WON’T pay more tax under NI hike | Personal Finance | Finance
Recently, Rishi Sunak announced a 1.25 percentage point increase to National Insurance to fund social care. Many were hopeful the Chancellor would reverse the National Insurance hike in his spring statement today.
But Mr Sunak insisted the rise was necessary in order to help the NHS and social care.
Taking a different step on National Insurance, however, the Chancellor is to increase the National Insurance threshold to £3,000.
It represents a substantial tax cut for working individuals, worried about the cost of living and increased taxes.
Amid the latest news on National Insurance, Money Saving Expert Martin Lewis has unpacked the impacts for Britons.
READ MORE: Rishi Sunak slashes income tax ‘for workers, pensioners & savers’
“(This is from combining new 1.25 percent point higher rate, with the £3,000 starting threshold).”
Indeed, experts have suggested the threshold rise may bring back average earners “from the brink”.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, remarked: “Raising the National Insurance threshold to £12,570 pulls lower and average earners back from the brink.
“It will mean 70 percent of people pay less NI, despite the hike in the rate in April, and will come as a real relief to those who are struggling with rising prices.
“The promise of an income tax cut in 2024 also offers some light at the end of the tunnel – but there’s an awful lot of tunnel to get through first.”
Calculations from the organisation suggest someone earning £14,500 a year will be £336 a year better off than they are right now.
The tipping point arises between £40,000 to £50,000.
As concessions go, an increase to the National Insurance threshold could prove “a big one”, Becky O’Connor, Head of Pensions and Savings at interactive investor remarked.
She added: “It will come as a relief to those worried about the impact of the Health and Social Care levy. The typical saving of £330 a year is significant.”
However, certain experts have warned a focus on National Insurance could be a “distraction”.
Tim Bennett, Head of Education at Killik & Co, said: “A fixation on Rishi Sunak’s increase in the national insurance threshold may distract attention from the potential impact of his baked-in “stealth taxes”.
“For example if CPI inflation remains at, or climbs above, today’s 6.2 percent the value of the fixed allowances he has already frozen over the next four years will be reduced substantially.
“To paraphrase Adam Kay, ‘This is going to hurt’.”
