Reduction in NI payments – what does it mean for me?

Published on: Wed, 06 Jul 2022
By: Claire, redwigwam

You’ve probably seen the news headlines: 2 million workers free from National Insurance.

But what does that mean? And what do you have to do? Are you really going to be better off?

We’ve put together this simple guide to help answer some of these questions – and to explain what National Insurance is and why we pay it.


But what do the headlines mean?

Well, to put it simply, as of today (6th July 2022) you can now earn £12,750 a year before you pay any National Insurance Tax – an increase from the previous threshold of £9,880.

This cut has been made by the government in the face of the cost-of-living crisis to support low-income workers and essentially allow them more ‘take home’ money each month.

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But before we look at what that means for you, here’s some brief answers to the questions we get asked most often about National Insurance.


What is National Insurance and who pays it?

National Insurance is a tax and is mandatory in the UK if you are over 16 and working.

If you are employed (which is everyone working for redwigwam) you are on a system called PAYE (Pay As You Earn), and the amount you need to pay is deducted automatically from your pay each time you are paid.

How can I see my National Insurance contributions?

You can check your National Insurance record here:

This record shows how many years of contributions you have made.

To be eligible for the full state pension when you retire you need to have made 35 years of National Insurance contributions. You’ll get a proportion of the full pension, if you have between 10 and 35 qualifying years.

You may be reading this now and think ‘it doesn’t really matter’ or ‘that’s years away’, but it is important to know – you may be eligible to top up any years you’re short, which could be worth considering, especially if you are close to retirement age.

If you have met the 35 years of contributions, and are still working, you do still have to pay National Insurance.

You can check your State Pension forecast here:

What if I’m not working – will I still get a State Pension?

As above, anyone who has 10 years of National Insurance contributions will qualify for some level of State Pension once they reach retirement age.

If you aren’t working or have gaps in your National Insurance record, there is help available – have a look at the website for more details as it does depend on individual circumstances.

So, am I going to be better off with the new National Insurance rate?

This depends on how much you earn. Roughly speaking though, anyone earning under about £34,000 a year will pay less National Insurance.

How do I claim this extra money?

You don’t have to do anything if you are on PAYE. Your National Insurance contributions are automatically calculated so you’ll see an increase in your ‘take home’ pay every month.

Don’t forget though, the saving number you may have seen in the headlines is over a year, so depending how much you earn, the amount you receive each month may be quite small.


One final note: Your National Insurance threshold taken from all money you earn – so you need to take into account how much you make from all jobs if redwigwam is not your only source of income.


Looking for a more flexible way to work?

Nine to five doesn't exist in our world. Join our redwigwam community and find work that fits in around your lifestyle.