Tax change

National Insurance cut saves up to £330 a year

Pay-wage-slip
Workers will see more money in pay packets

Thirty million workers will benefit from a £6 billion tax cut coming into force today that will see a saving of up to £330 per year.

It means the level of pay at which National Insurance contributions kick in rises to £12,570 – lifting 2.2 million people out of paying any personal tax.  

The threshold change, brought in following pressure to help counter the new health and social care levy, means that 70% of UK workers will pay less National Insurance.

However, there are almost two million more higher and additional rate taxpayers in the UK, according to HM Revenue and Customs.

The number of people paying 40% or 45% tax has risen from 4.25m to more than 6.1m workers since 2019. Inflation is at 9.1% and expected to rise further. This means pay rises are expected to lead to many more people paying higher tax rates, and generating more money for the Treasury.

Regarding the NIC cut, Prime Minister Boris Johnson said:  “Whether you are a receptionist, work in hospitality or are a delivery driver, this tax cut is likely to make you and your family better off.”

From today the level at which people start paying National Insurance has risen from £9,880 to £12,570.

This change means that millions of people working across hundreds of different industries across the UK will now be better off.

This includes bricklayers who’ll save £218, care workers who’ll save £324, hairdressers who will get a £118 benefit and nursery assistants who’ll get a £343 yearly boost.

Workers can check their salary in the government’s online tool to estimate the amount they could save between July 2022 to July 2023.

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The last major personal tax cut of today’s magnitude was nearly ten years ago, when the income tax personal allowance increased by £1,100 in 2013. Today’s threshold change is more than double that, as working people are now able to hold on to an extra £2,690 free from tax.

Today’s change to National Insurance thresholds comes as part of the former Chancellor’s wider vision for a lower tax economy.

At the Spring Statement Rishi Sunak announced a 1p income tax cut in 2024 – which will be the first cut to the basic rate in 16 years and will save the average taxpayer a further £175 a year.

He also committed to cutting and reforming business taxes later this year in the autumn, to help spur business growth and productivity. The government is currently working with industry on how best to do that.

OccupationMedian salary (£)Calculator result
Hospital porter19860£292 less
Shelf stacker12351£333 less
Security guard24814£246 less
Fork-life truck drivers25072£243 less
Van drivers20250£289 less
Lorry drivers30620£191 less
Construction workers26619£229 less
Sewing machinists16651£322 less
Tyre fitters22513£267 less
Metal workers22842£264 less
Retail cashiers and sales assistants10555 / 12071£112 less / £298 less
Hairdressers, beauticians and barbers10608£118 less
Care workers16502£324 less
Nursery assistants14462£343 less
Chefs17906£311 less
Butchers22561£267 less
Fishmongers18987£300 less
Bakers19933£292 less
Painters and decorators23224£261 less
Builders, floorers, wall tilers and plasterers25030£244 less
Bricklayers27756£218 less
Plumbers31602£182 less
Carpenters and joiners27520£220 less
Receptionists14317£344 less
Youth workers23136£262 less


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