Martin Lewis says that some UK workers will see an extra £754 in take-home pay through National Insurance tax cuts at the turn of the year. It comes after Chancellor Jeremy Hunt announced that the main rate of NI contributions will be slashed from 12 per cent to 10 per cent as of January 6, in his Autumn Statement last week.
The rate is paid by those who earn more than £12,570 per year from work, and it is usually deducted from your pay-packet before your employer gives you your wages. Those who are self-employed meanwhile pay this through a self-assessment annually.
There are also several different classes of National Insurance, so people will pay different amounts dependent on their monthly and annual wage. Speaking from the Commons on November 22, Mr Hunt said that the move will benefit around 27million people - roughly half the population of England.
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Martin Lewis took to X to share a ten minute clip on what the Autumn Statement means for residents of the UK. He said: "The way National Insurance works, it is a tax, so if you earn over £12,570 up until £50,270, you're currently giving 12% of that amount to the tax office in the form of National Insurance, from then you'll only be giving 10% of that away, so that is quite a substantial cut and it means people will take home more next year.
"It doesn't make up for the freezing of the Income Tax thresholds that we've had for the last couple of years but it is an attempt to be a bit more generous and get a bit more money in people's pockets. It's not the only change on National Insurance, for those who are self-employed and are on Class 4 National Insurance, that rate will be cut from 9% to 8%.
"Class 2 National Insurance, which is a flat rate of £3.45 paid by self employed people who earn over £12,570 a year is being abolished. You will no longer pay that £3.45 flat rate, so that is £170 a year."
Martin also noted that through the changes, those who earn around £35,000 per year will see their take home pay increase by almost £400. Here's what other workers may get from their own annual incomes:
- £20,000 - extra £148.60 a year from January 6
- £30,000 - extra £348.60 a year from January 6
- £35,400 - extra £450 a year from January 6
- £45,000 - extra £648.60 a year from January 6
- £55,000 and over - extra £754 a year from January 6
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