Around 30 million people across the UK will be looking forward to seeing extra cash in their pocket after the biggest personal tax cut in a decade came into force.
Some lucky workers will be saving £330 a year, with around 2.2 million no longer having to pay tax.
The £6 billion tax cut will see the level at which people start paying National Insurance rise from £9,880 to £12,570.
How much are you saving?
The threshold change means that 70% of UK workers will pay less National Insurance, even after accounting for the Health and Social Care Levy that is funding the biggest catch-up programme in NHS history.
Workers can check their salary in the government’s online tool to estimate the amount they could save between July 2022 and July 2023.
The last major personal tax cut of this magnitude was nearly 10 years ago, when the income tax personal allowance increased by £1,100 in 2013. This threshold change is more than double that, as working people are now able to hold on to an extra £2,690 free from tax.
The increase to the National Insurance thresholds will leave around 76% of National Insurance payers in the North East better off, 75% in the North West and Merseyside, and 62% in London.
The landmark personal tax cut came as the Government launched a new Help for Households campaign designed to raise awareness and signpost people to the £37 billion in support on offer and targeted at those most in need. The support provides millions of the most vulnerable households at least £1,200 of support in total this year to help with the cost of living, with all domestic electricity customers receiving at least £400 to help with their bills.
Income tax cut to follow in 2024
It also includes a 5p fuel duty cut – the biggest cut ever to fuel duty rates, a rise in the national living wage to give full-time workers an extra £1,000 and a cut to the Universal Credit taper rate to provide more than one million families an extra £1,000.
The change to National Insurance thresholds comes as part of the wider vision for a lower tax economy. At the Spring Statement, then Chancellor 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. The former Chancellor also committed to cutting and reforming business taxes later this year in the autumn, to help spur business growth and productivity. In the light of recent events, there has to be uncertainty around what happens next.
Source: DocSafe
