The Treasury has launched an online tool to show how take-home pay will be impacted by the upcoming changes to the National Insurance threshold from July.
The tax cut represents a £6bn cut to National Insurance and is effective from 6th July.
It is worth an average £175 a year to taxpayers and is designed to go some way towards offsetting the 1.5% increase which has been introduced through the Health and Social Care Levy. The levy came into effect 6th April.
The online checker will use salary information for employees who are paid through the PAYE system and will give bespoke estimates of how much they could save because of the government’s changes.
All you have to do is enter your current salary before tax and it calculates the estimated saving depending on earnings.
The cut, which will see the point at which people start paying National Insurance rise to £12,570, is worth up to £330 and seven in 10 workers will pay less National Insurance even after accounting for the health and social care levy, according to the Treasury.
The upcoming changes
From July, if you earn £36,600 or under, you will pay less National Insurance.
Everyone who pays National Insurance will see a tax cut, and the tool will show that employees earning up to £51,000 will see this cut more than offset the impact of the health and social care levy. This means the majority of working people will see a boost to their take home pay.
The tool estimates how much National Insurance an employee paid from July 2021 to June 2022 at the old rate and compares it with how much they will pay from July 2022 and June 2023. Despite this, it is not suitable for every situation and does not provide a calculation of an individual’s National Insurance contributions liabilities.
Chancellor Rishi Sunak commented:
‘With our historic £6bn National Insurance tax cut just weeks away, this new tool will show hard-working Brits how much more of their pay will be going directly into their pocket. This tax cut, combined with £400 off energy bills and direct payments of £1,200 to eight million families, will help shield people from rising prices.’
Financial support and benefits checker
Alongside this tool, the government has also launched a new financial support and benefits checker tool. It enables users to answer 10 simple questions to find out what support they might be eligible for by cross-checking against 25 individual benefits and support offers.
This is part of the government’s drive to help people manage the increased cost of living.
This first version of the financial support and benefits checker tool includes a selection of benefits and other sources of financial support, such as childcare support, job seeker’s allowance, budgeting loans and housing benefit.
However, it does not include information about pension credits which are underclaimed by an estimated 1.3m pensioners.
The online tools can be accessed by clicking here.
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