This week, national insurance payments are changing, with more than two million low-income workers no longer paying. Employees can now earn £12,570 a year before they pay National Insurance, and workers earning less than £34,000 a year will pay less. It is estimated that seven in ten employees will be better off.
This is the second of three stages of change to national insurance, the first of which came in April 2022 and saw a rise of 1.25p to the pound on payments, which has been earmarked for health and social care in England and is also available to Wales, Scotland, and Northern Ireland. The last of the three stages will happen in April 2023, when the 1.25p will be taken away again and the payments will go back to what they were before. |
However, analysts have also said that any savings may be cancelled out by the increasing prices and bills. Alice Haine, personal finance analyst at investment platform Bestinvest, said the savings for some people, "could be the difference between having dinner every night and sometimes going without." For others, however, that amount will barely make a dent in their budgets as they struggle to pay household bills amid rampant inflation as soaring food, fuel, and energy prices become the norm".
Employers will also be paying more, which has caused concern among business groups, who say this means some places will be unable to pay staff higher wages. The increase for employers and higher-income workers should raise an extra £10.9bn in a year for the government.
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