MILLIONS of workers will see a change in their incomes from tomorrow following a change to National Insurance.
The new rules will slash the amount of tax people pay giving them a much-needed to their pay packet.
The threshold for making National Insurance contributions (NICs) will rise from £9,500 to £12,570 from July 6.
Workers will be paying on average £330 less NICs – and some will now pay no NICs at all.
But the exact amount 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 tomorrow and you should see it on your next payslip after this date.
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It was was first announced in March by Chancellor Rishi Sunak to try and tackle the cost of living crisis.
In April, National Insurance rates were increased from 12% for the lower band and 2% for the higher band, to 13.25% and 3.25% – meaning workers paid more in NICs.
The current threshold for paying National Insurance is £9,880 a year, and if you earn less than this, you won't pay any.
If you earn more, you'll pay 13.25% of your earnings between £9,880 and £50,270.
You'll pay 3.25% on any earnings above £50,270.
But from tomorrow, the National Insurance threshold will rise to £12,570.
This means you can keep more of your money before paying NI.
Under the changes, anyone earning less than £31,500 stands to be better off overall, according to experts at AJ Bell.
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A spokesman said: "Anyone earning more than around £31,500 will face a bigger bill and higher earners will be hit with hundreds of pounds in additional National Insurance thanks to the Chancellor’s changes.
"For example, someone earning £35,000 will only pay £47 more in tax this year, but those earning £45,000 will be hit with an extra £172 in National Insurance in 2022/23.
"A higher earner on £80,000 will be paying £609 in extra National Insurance costs – more than £50 a month more, and someone on £100,000 is facing an extra £859 on their bill."
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 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.
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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