With the change coming within days, hundreds of workers will get a raise.
The new social security rules will reduce the taxes to be paid, which will lead to a huge increase in income.
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Changes in tax rules will cause many workers to see extra money in their pocketsCredit: Getty
The limit for the National Insurance Contribution (NIC) will be increased from £9,500 to £12,570 with effect from 6 July.
This is happening as households are squeezed by rising costs from food and fuel to energy bills.
Writing exclusively for The Sun on Sunday, Prime Minister Boris Johnson said the measures would save 30 million workers up to £330 a year.
And 2.2 million people would be excluded from paying full Social Security.
Chancellor Rishi Sunak has urged Sun readers to use the government’s handy tool to check how much more they see in their pay packages.
It’s estimated that someone making £15,000 a year is paying £338 a year less NIC.
With an annual salary of £25,000 you will be paid £244 less per year and at £35,000 your NIC will be reduced to £150.
The exact amount of the cash boost depends on your earnings and can be affected by other things like bonus payments or salary deductions.
The social security limit increase is effective July 6 and you should see it on your next deposit slip after that date.
The tax cut would result in workers paying an average of £330 less NIC – and some would pay no NIC at all.
You can try the handy online tool on the government website for yourself to get the estimate – all you have to do is enter your annual salary.
The tax change was first announced in March by Mr Sunak to try to deal with the cost of living crisis.
The latest inflation figures suggest prices could rise by 9.1% and worsen to 11%, experts have warned.
This means that the cost of basic necessities like groceries and petrol is much higher than last year.
But wages are not rising as finances are squeezed for millions of Britons
The Government has also announced a support package of up to £1,500 for the hardest hit families.
Millions of people on Universal Credit and other benefits are due to receive the first half of the £650 cost from July 14.
But the tax change came after the National Insurance Hike on April 6, which saw thousands of people pay more.
Social security contributions increased social security contributions by 1.25 percentage points.
Overall, both changes mean anyone earning less than £31,500 is in a better position, experts at AJ Bell said.
Laura Suter, Head of Personal Finance, said: “From July 6 millions of people will see their Social Security bills cut as the limit at which people start paying tax is raised to £12,570.
“The move means most people with annual wages of up to £12,570 will not have to pay income tax and no National Insurance.
“While it will be a welcome relief for many to see the amount deducted for Social Security on their payslips reduced from next month, we are all still paying more in taxes when Chancellor Rishi Sunak introduced the system. began to change.”
What is National Insurance?
Social security is a tax paid by employees above a certain income.
Contributions help fund benefits such as state pensions, sick pay, and unemployment benefits.
All UK citizens are automatically given an NI number (and NI card) before the age of 16.
Your NI number helps the government track your earnings and collect the correct amount of tax.
If you are 16 years old and earn more than a certain amount, you currently pay social security contributions.
Workers currently pay 13.25% on earnings between £9,564 and £50,268 with an additional 3.25% on wages.
The tax is deducted from your salary each month and you can see how much you pay on your payslip.
Once you have reached the statutory retirement age, you no longer have to pay social security. Social security is not the same as income tax, and you also pay it separately on your income.
Social Security works differently when you’re self-employed.
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