The Chancellor, Rishi Sunak announced in his Spring Statement that he has unveiled a new Tax Plan to help ease the rising cost of living.
The news comes as Rishi Sunak announces a tax cut for UK workers through a rise in the National Insurance thresholds which comes into effect from July 2022.
The new National Insurance threshold will now be £12,570, the same as the Personal Tax Allowance. This means that from July, 70% of workers will now pay less National Insurance, even after accounting for the Health and Social Care Levy.
What this means for employees
- Between 6 April and 5 July 2022, employees will be able to earn £190 a week and £823 a month without paying Class 1 NICs and the Levy.
- Between 6 July 2022 and 5 April 2023, this threshold will increase to £242 weekly and £1,048 per month.
Rishi Sunak also announced an increase to the Employment Allowance of £4,000 to £5,000 which smaller businesses can benefit from to reduce their employers National Insurance. This comes into effect from 6th April 2022.
The basic rate of income tax will be cut by 1p in the pound so from 20% to 19%, however this is set to come into force from 2024-2025.