National Insurance threshold: What the National Insurance change means for the average Leeds worker
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The proposed increase in personal allowance will help workers cope with rising National Insurance (NI) tax contributions, chancellor Rishi Sunak has said.
During his Spring statement last week (23 March), Sunak confirmed the planned rise in NI stating that it is necessary to shrink the deficit and fund the NHS.
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Hide AdThe hike in tax will see the average worker paying an extra £250 a year, or around £20 a month, of their earnings.
Below is everything you need to know about the increase in National Insurance and the increase in personal allowance.
What is the National Insurance threshold and how much has personal allowance increased?
The UK’s National Insurance threshold has been raised from £9,570 to £12,570 - £300 more in personal allowance.
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Hide AdThis means that workers won’t pay any National Insurance on the first £12,570 of earnings from July 2022.
How will the increased threshold help people in Leeds?
The Government's new National Insurance plan means the average Leeds worker will be paying less per year from July, figures suggest.
Nearly 30 million UK workers will see their taxes cut following Chancellor Rishi Sunak's raising of the NI earnings threshold, though a think tank said over 1 million Britons will be on the verge of "absolute poverty" due to the rising cost of living.
Figures from the Office for National Statistics show that the median salary for full-time workers living in Leeds was £30,889 in 2021.
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Hide AdCurrently, employees pay National Insurance on 12% of their annual earnings over £9,568, meaning a worker on this wage would pay £2,559 – around £213 per month.
When will National Insurance increase?
From 1 April National Insurance will increase by 1.25 percent for workers to raise extra funds for the NHS and social care.
This means it will rise from 12 percent to 13.25 percent.
Why is the government increasing National Insurance?
The National Insurance increase was announced in September as a way to help fund the NHS and social care.
This includes care homes and personal care for those with disabilities.
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The government has said that only people who do not have assets worth more than £20,000 will be given social care free of charge.
The total cost of social care will be capped at £86,000 over a person’s lifetime.
How much extra will I have to pay in National Insurance?
Currently employees pay 12 percent National Insurance on their earnings between £12,570 and £50,268.
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Hide AdFrom 1 April this will rise to 13.25 percent, which is expected to mainly affect people at the lower end of the income scale.
Workers on a salary of £20,000 will pay an additional £130 a year
Workers on £30,000 will pay £255 more a year
Workers on £40,000 will pay £380 more a year
Workers on £50,000 will pay £505 more a year
Workers on £80,000 will pay £880 more a year
Those who are earning less than £12,570 a year will not have to pay the increase.
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