Employees can now earn £12,570 a year before paying National Insurance tax, up from £9,880.
An employee earning £20,000 a year will pay £178 less National Insurance in 2022-23 than they did the previous tax year
Although, in April, the government increased the rate paid - to raise money to fund health and social care.Analysts said the latest change, which takes effect in pay packets from Wednesday, marks another turn in the "swings and roundabouts" of National Insurance policy. It meant that, instead of paying National Insurance contributions of 12% on earnings up to £50,270 and 2% on anything above that, employees now pay 13.25% and 3.25% respectively.What will April's tax changes cost me?
Rishi Sunak, when chancellor, responded by raising the earnings threshold at which National Insurance starts to be paid by employees to £12,570 - a policy that has now taken effect. The final change comes in April 2023, when National Insurance rates return to their previous level. The extra 1.25% charge will be collected as the new Health and Social Care Levy and, unlike National Insurance, will also be paid by state pensioners.Alice Haine, personal finance analyst at investment platform Bestinvest, said the savings for some people "could be the difference between having dinner every night and sometimes going without".
"Higher employer National Insurance contribution rates still mean less money in the economy for pay rises, let alone sustainable investment, recruitment and discretionary spending," said Tina McKenzie, from the Federation of Small Businesses.
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