Cost of living: National Insurance contributions fall this month

Millions of workers in the UK will be better off this month, saving an extra £330 a year, due to a change in national insurance contributions.

Under Liz Truss’ leadership, then Chancellor Kwasi Kwarteng reversed a 1.25 per cent rise in national insurance contributions, with the change coming into effect this month.

The rise was originally introduced under Boris Johnson, while Rishi Sunak was Chancellor in April, but national insurance contributions will fall to their old level this month despite Mr Sunak now being Prime Minister.

The reversal of the rise was one of Mr Kwarteng and Ms Truss’ economic policies not scrapped by new Chancellor Jeremy Hunt.

Slough Observer:

The change means that workers will now pay 12 per cent on earnings between £12,570 and £50,270, down from 13.25 per cent.

While for earnings above £50,270, the rate has dropped to 2 per cent from 3.25 per cent.

How much will I save as National Insurance contributions fall?

The government claims the change will save around 28 million people an extra £330 a year on average.

According to Hargreaves Lansdown, personal finance specialists, this is how much each person will save depending on their salary:

  • Workers on £20,000 will save £93 a year
  • Workers on £30,000 will save £218 a year
  • Workers on £40,000 will save £343 a year
  • Workers on £50,000 will save £468 a year
  • Workers on £60,000 will save £593 a year
  • Workers on £80,000 will save £843 a year
  • Workers on £100,000 will save £1,093 a year

Announcing the reversal of the rise in September, Mr Kwarteng described it as a “tax cut for workers”.

He said: “I can confirm that this year’s 1.25% point rise in National Insurance will be reversed on 6th November.

“Its replacement – the Health and Social Care Levy planned for April 23 – will be cancelled.

“A tax cut for workers. More cash for businesses to invest, employ and grow,”

Slough Observer | News