MILLIONS of workers are set to get a pay rise thanks to a change coming within days.
New rules for National Insurance will slash the amount of tax people pay giving a much-needed boost to incomes.
The threshold for making National Insurance contributions (NICs) will rise from £9,500 to £12,570 from July 6.
It comes as households are under pressure to keep up with rising costs from food and fuel to energy bills.
Chancellor Rishi Sunak has urged Sun readers to check how much more they will see in their pay packet using the government’s handy tool.
It estimates that someone earning £15,000 a year stands to pay £338 a year less NICs.
Meanwhile on an annual salary of £25,000, you stand to pay £244 year less, and on £35,000 your NICs will reduce by £150.
The exact amount of the cash boost depends on how much you earn and can be affected by other things, like bonus payments or salary deductions.
The increase to the National Insurance threshold comes into effect from July 6 and you should see it on your next payslip after this date.
The tax reduction will see workers paying on average £330 less NICs – and some will now pay no NICs at all.
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You can try the handy online tool yourself on the government’s website to get an estimate – you just have to enter your annual salary.
The tax change was first announced in March by Mr Sunak to try and tackle the cost of living crisis.
Prices are rising at a rate of 9.1% the latest inflation figures show and that could worsen to 11% experts have warned.
It means everyday items like groceries and petrol cost far more than they did this time last year.
But wages are not rising at the same rate squeezing finances for millions of Brits
The government has also announced a package of support worth up to £1,500 for the most hard-up households.
Millions on Universal Credit and other benefits are set to get the first half of a £650 cost of living payment from July 14.
But the tax change comes after a National Insurance HIKE on April 6, which saw millions pay MORE.
The social care levy added 1.25 percentage points to National Insurance rates.
Overall both changes mean that anyone earning less than £31,500 stands to be better off, experts at AJ Bell said.
Laura Suter, head of personal finance said: “From July 6 millions of people will see their National Insurance bills cut, as the threshold at which people start paying the tax is raised to £12,570.
“The move means that most people on an annual salary of up to £12,570 will pay no income tax and no National Insurance.
“However, while it will be a welcome relief for many people to see the amount deducted for National Insurance on their payslip fall from next month, we’re all still paying more tax than when Chancellor Rishi Sunak started changing the system.”
What is National Insurance?
National insurance is a tax paid by workers above a certain level of earnings.
The contributions help fund benefits like the State Pension, sick pay and unemployment benefits.
All UK nationals receive an NI number (and NI card) automatically before they turn 16.
Your NI number helps the government track your earnings and charge the right amount of tax.
You currently pay National Insurance if you’re 16 and earn over a certain amount.
Workers currently pay 13.25% on earnings between £9,564 and £50,268 and a further 3.25% is paid on wages over that.
The tax is deducted from your wages each month and you can see how much you pay on your payslip.
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Once you reach state pension age, you don’t need to pay National Insurance at all.National Insurance is not the same as income tax, and you pay this separately on your earnings too.
National Insurance works differently if you’re self-employed.
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