National Insurance tax cut from July 6 – use the government’s tool to determine how much extra pay you will receive

The lowest-paid workers are set to receive extra pay in their pockets from July 6 due to a change in the calculation of National Insurance. Under the plan announced in March by Chancellor Rishi Sunak, from that date the threshold at which workers start paying National Insurance will increase by £3,000.

This means less of a worker’s income will be subject to National Insurance as they will earn up to £12,570 a year before paying it – a big increase from the current rate of £9,880. This aims to thwart an earlier decision by Sunak to increase income tax contributions by 1.25% to raise funds to deal with the huge hole in public finances caused by Covid.

The cost of living crisis, including massive increases in energy costs for electricity and fuel, led the chancellor to try to help.

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It has been estimated that 30 million workers will benefit and a further 2.2 million people will not have to pay AI at all. The government’s website has a special tool for people to enter key wage information, then it will give you an estimate of how much less you’ll pay. To use it click here.

Broadly speaking, this means workers will not pay National Insurance or income tax if they earn less than £12,570 a year. If you earn more than that, they will still feel the benefits and pay less National Insurance overall due to the higher threshold.

The change will save each employee an average of £330 in national insurance a year.

Estimated national insurance contributions:


National Insurance Fee 2021/2 PA

Is the national insurance fee after July 6
















This means that someone earning £20,000 would earn an extra £30 per month, depending on factors such as pension contributions and other factors such as marriage loans and student loans which affect your overall take home pay.

A person earning £40,000 in the same situation would take home an extra £29 per month. The additional amount – £29 – is the same even if you won £100,000, according to the calculator.

But over the course of a year the savings amount to hundreds of pounds, which is certainly welcome at a time when inflation is at 9%. However, not everyone was enthusiastic about the change, saying it doesn’t go far enough.

Gareth Frost said: “The salary is 10 more per month. But since April the cost of the rise is less.

“So it’s pretty much working like before. Not to mention everything has gone up, so I’m very badly off.

“Sunak has no idea. They’ll pass it off as a big tax cut, I bet”

Maria D. Ervin