Measure
The threshold at which employees and the self-employed start to pay National Insurance Contributions is to be increased from £9,880 to £12,570, which aligns it with the tax-free personal allowance for income tax. This will remain aligned with the personal allowance, which is frozen until 5 April 2026.
The government comments that this measure is expected to result in an annual saving for a typical employee of over £330 and for a typical self-employed person of over £250.
The measures will affect the majority of employed and self-employed individuals.
The measures will take effect from 6 July 2022.
Aligning the threshold from which National Insurance becomes payable with the personal allowance for income tax is a welcome simplification that benefits all employed and self-employed individuals who earn enough to be required to make National Insurance Contributions. The government comments that this will mean around 70% of workers will make smaller National Insurance Contributions than they would have, even accounting for the introduction of the Health and Social Care funding changes from 6 April 2022.