The long-awaited increase in the threshold for National Insurance contributions (NICs) has come into effect as of today (Wednesday 6 July), rising from £9,880 to £12,570.
Announced in the Spring 2022 Statement by former Chancellor Rishi Sunak, the measure aims to help people hit by the rising cost of living crisis and will benefit 30 million workers in the UK, according to the Government.
Partially offsetting the 1.25 percentage point rise in NICs and future health and social care levy, the threshold allows people paying class 1 NICs to earn more a year before their salary is affected by NICs.
Raising the threshold to £12,570 means the point at which NICs are payable is in line with the personal allowance limit for income tax for the first time.
Federation of Small Businesses policy chair Tina McKenzie said:
"It's right that the Government ensures employees and sole traders can keep more of what they earn.
"That said, memories haven't faded of the tax hikes that landed in April, which today's changes only partially unwind.
"These adjustments shouldn't be seen in isolation, as we still face a higher tax burden than we did in March."
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