Martin Lewis has spoken out on how much people will need to make before losing money after the Spring Statement announcements.
Chancellor Rishi Sunak delivered his mini-statement on Wednesday March 23. One of the changes he promised was to raise the National Insurance threshold by £3,000. Mr Sunak told MPs: ‘Our current plan is to raise the NIC threshold this year by £300, I’m not going to do that – I’m going to raise it by £3,000, delivering on our promise to fully equalize the NIC and income tax thresholds.
“And not gradually over many years, but all at once, this year. From this July people will be able to earn £12,570 a year without paying a penny of income tax or insurance This is a £6 billion tax cut for 30 million people across the UK A tax cut for employees worth over £330 a year The biggest increase in a base rate threshold to date, and the biggest personal income tax cut in a decade.
READ MORE: Martin Lewis sends an urgent message to anyone paying a mortgage
The Money Saving Expert founder was quick to deliver on all the promises in a video that has gone viral on social media. Mr Lewis’ first point focused on National Insurance and how it is set to rise by 1.25 percentage points, meaning those with higher salaries will soon lose more money.
“The big issue was National Insurance,” Lewis said. “Now it’s been pre-announced and has been very controversial that national insurance is set to increase by 1.25 percentage points, which actually increases the amount of national insurance, which is actually a tax on the income for these people by about 10%.People are going to pay 10% more to national insurance because of this increase, roughly.
“It’s still in place, but to mitigate it, which the Chancellor did, he changed the threshold at which you start paying it. So today you start paying National Insurance a once you earn around £9,600 a year and you start paying income tax once you earn around £12,600 a year From July onwards it moves so those two levels will be at the same rate which is reasonable.
“So that means you won’t be paying National Insurance now until you earn around £12,600 from July, which is £3,000 more than at the moment. The saving on that is £360 £, but of course once you start paying National Insurance, because of the extra 1.25 percentage points people are going to pay, people are going to pay more.”