National Insurance rise reverts. What does this mean for me?
By: Claire, redwigwam
Back in July, we published this article about a reduction in the National Insurance threshold and what it means for you. 2 million people were set to be better off under these changes.
Now, unless you have been living under a rock (or to be fair, avidly avoiding the news), you can’t have missed the latest headlines, claiming almost 28 million people will be better off under another change to National Insurance which will happen on 6th November, when a 1.25% rise in National Insurance will be axed and the government will also axe a planned health and social care levy.
But what does this mean? Are these changes the same thing?
IT’S SO CONFUSING
Read on and we will explain it as simply as possible.
Debunking National Insurance
Our original article contains loads of useful information about what National Insurance is, who pays it, what it is used for and how you check your National Insurance contributions. We’d recommend you have a read as it is important.
What do the latest changes mean?
In July, the headlines were all about 2 million people getting a National Insurance cut. But is this impacted by the new changes?
And most importantly. Will you have money at the end of the month?
First and foremost, as always with tax and National Insurance, there is no one-size-fits-all answer…
As a redwigwam worker, all your wages are subject to National Insurance – and as a business, we also pay a NI contribution for all hours you work for us.
There are weekly thresholds for National Insurance. This is the amount of money you can earn before you pay any National Insurance contributions.
It was this threshold that changed in July – meaning you could earn more before you paid any NI. This threshold is NOT changing in November.
In general, if you earn more than £12,570 a year, you will pay a National Insurance contribution.
The changes coming are about the AMOUNT of NI you pay on what you earn. This had been subject to a different increase earlier in April 2022, when then Chancellor, Rishi Sunak increased the amount we pay by 1.25%.
It is this 1.25% increase which is being removed. Which means, if you pay National Insurance contributions, you will pay less. And the more you earn, the more you’ll save.
As a rough guide, someone earning £20,000 a year will save about £93 a year and someone earning £100,000 will save £1,093 (compared to present).
There’s a simple calculator here – just type in your annual salary and see how much you’re paying now and how much that will change to in November.
How do I get this money? Do I need to do anything?
Because National Insurance is managed through your employer’s payroll, the reduction will happen automatically.
You don’t need to tell us (or anyone else you work for) – the amount you pay will automatically adjusted.
As an aside, the planned ‘Health and Social Care’ levy, previously announced by Rishi Sunak to pay for social care and help ease the NHS backlog has also been scrapped. This would have replaced the 1.25% National Insurance rise next April.
One final note on National Insurance. You pay NI on all money you earn, so you need to consider how much you make from all jobs if redwigwam is not your only source of income.
