It won’t be long before Britons have a little extra money in their pockets every month as changes to National Insurance begin.
Working Britons are charged for National Insurance just as they are for income tax, but the money is allocated to some safety net built into society.
The money collected by the National Insurance goes to pay pensions, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement support.
If you’re a salaried employee, you’ll be paying all of that money, whereas people who are self-employed will only have their money go toward some of that money.
Currently, you pay nothing on the first £242 you earn in a week, which is 12 per cent of what you earn between £242.01 and £967, and if you earn anything more than that in a week, it’s another 2 per cent more than that.
As an example of how it works, if you earn £1,000 a week (you’re lucky so-and-so), you pay nothing on the first £242, £87 as the main National Insurance rate and then an extra 66p on that last bit of weekly earnings.
In the example above, this reduction means that the person earning £1,000 a week will now pay £72.50 on their earnings of between £242.01 and £967, meaning they will have an extra £14.50 in their pocket each week.
As for what this means for the average Briton over the course of a year, the average salary in the UK is £35,000 and this change will save most Brits around £450 a year.
The change will affect 27 million people aged between 16 and state pension age, as Britons working past retirement age will no longer pay National Insurance.
Prime Minister Rishi Sunak, who said today (January 4) that he had a “practical assumption” that he would call a general election in the second half of 2024, told a crowd in Mansfield about the impending cut to National Insurance.
He said: “This Saturday, a huge tax cut will be implemented, and every working person across the country will benefit from it. It is worth £450 for the average person working on average salary.”
“We want to do more because when we manage the economy responsibly, we can lower taxes, give you and your family peace of mind, immediate relief from some of the challenges you face and confidence that the future will be better for you and your children.
“This is the journey we’re on.”
However, according to pay scale The average salary in Mansfield is £26,000, so people he spoke to may not be saving up to £450.