Half of us are not aware that our monthly National Insurance (NI) contribution may have increased as of this month, before a reduction introduced by the Government in the March Budget kicks in come July
This is according to Research by RIFT Tax Refunds. Their research also showed that while 62 percent knew of the Chancellor’s latest tax reprieve and the potential benefit to their income, 54 percent were unaware that it didn’t come into effect until July.
In his March Budget, Chancellor Rishi Sunak announced that from the 6th July, the NI payment threshold would increase from £190 per week to £242 per week in a bid to help those struggling with the escalating cost of living – meaning the contribution we make via our gross income will reduce,
The research by RIFT Tax Refunds shows that, based on the current average UK income of £31,447, this change will see the average person pay £208.28 per month in NI, a saving of £10.51 when compared to the 2021/22 tax year.
However, last Autumn, the Government announced a 1.25 percent increase to NI tax thresholds, meaning that the previous 12 percent paid on earnings up to £50,270 would now increase to 13.25 percent, while the 2 percent paid on anything above that total would increase to 3.25 percent.
This change was implemented from this April, meaning that the average UK person will actually pay £238.14 per month between now and July of this year – £19.35 more each month than they did during the last tax year.
CEO of RIFT Tax Refunds, Bradley Post, commented:
“Many households are struggling in the current economic climate and the escalating cost of living is putting incredible strain on their finances. So the Government’s announcement to reduce the amount contributed in National Insurance will have no doubt been a welcome one.
“But while this was a great initiative to help the Government grab headlines, it’s not due to materialise until July. In the meantime, it’s unfortunately going to get worse before it gets any better and although the average person will stand to save £10.51 compared to the last tax year, their contribution is set to climb by £19.35 in the meantime”
“For a great deal of people, this will only add to what is already a very difficult time and it could be particularly problematic for those who remain unaware as to how their contribution is changing and when.
“Tax contributions can be a confusing topic at the best of times, but arming yourself with the best possible understanding of how your income is due to change can help you budget more effectively and organise your finances accordingly.”