Your Take Home Pay Will Be (Slightly) Higher From This Month, Here's Why
With the cost of living crisis hiking up the prices of many of our bills, everyday items and supermarket faves, our purse strings are getting tighter.
Our wages aren’t changing much either, to add to the frustration.
But there is some good news. Due to changes in national insurance, you should be seeing more take-home pay than you’ve been getting if you currently earn less than £41,389 per year.
That’s because the point at which you start paying national insurance will rise from £9,880 to £12,570 from July (it already increased from £9,568 in April). From July, you’ll pay 13.25% of national insurance on earnings after £12,570.
HMRC data showed that the average UK salary at the start of 2022 was £24,600. Based on this, workers are estimated to pay £248 less in national insurance each year.
So what does that all mean for you?
From July 6, anyone who earns less than £41,389 should see some more take-away pay than they have been seeing recently. And with 70% of the UK workforce earning less than this amount, that affects most workers.
The government’s website has a handy calculator which shows how your national insurance payments will be changing – simply put in your current salary to view the difference.
If you earn £32,000, for example, you’ll see a difference of £178 for the year.
It might not be much but given the difficulties of the financial climate right now, but every little helps.
Why has this happened?
The government’s plan to hike NI contributions by 1.25% for one year from April 2022 until 2023 received a lot of pushback earlier this year. With people facing rising cost of inflation and increases to energy caps, critics blasted the government for further hikes.
Ministers said the NI hikes were to support the NHS and a new health and social care levy.
This higher NI threshold from July is a move to (slightly) reduce costs for those on the lowest wages. It will continue even when the health and social care is implemented next year.
