MILLIONS of workers are in line for a £450 pay boost after the Government announced a fresh National Insurance (NI) cut.
The Chancellor Jeremy Hunt today confirmed the move as part of the Spring Budget – and our calculator below tells you how much better off you’ll be.
AFPJeremy Hunt in the House of Commons today[/caption]
Mr Hunt revealed a 2p cut to Class 1 NICs which will come into effect on April 6.
It means someone earning a salary of £35,000 a year will see their payslip boosted by £448.60 a year.
Those on a £50,000 salary will see their pay rise by £750 a year.
Meanwhile, Class 4 NICs for the self-employed will fall by a further 2p on top of an already announced 1p cut.
It comes after Mr Hunt and the Government announced a swathe of changes today.
The Chancellor announced the minimum amount parents will start having to pay back child benefit will rise from £50,000 to £60,000, while the upper threshold will increase to £80,000.
Meanwhile, households on Universal Credit and other benefits will see their payments rise by 6.7% from next month, Government documents revealed.
Plus, a huge fund offering cost of living support to low income households and those on benefits has been extended for six months.
However, in a blow for households, the pack of cigarettes will top £16 after the Chancellor announced an increase in tobacco duty.
Tobacco duty is a tax on the production or importation of tobacco which is passed on to shoppers.
Meanwhile, the cost of vapes will also increase after an announcement from the Chancellor today.
How much is National Insurance getting cut by?
The Chancellor Jeremy Hunt confirmed the Government is cutting the main rate of employee NI, also knowns as Class 1 NICs, by 2p from 10% to 8%.
It comes after the Government cut the rate by two percentage points from 12% to 10% on January 6.
Meanwhile, the Government is also cutting 2p from the main rate of self-employed NI, also known as Class 4 NICs, in addition to a 1p cut announced in the Autumn Statement.
Chancellor Jeremy Hunt said: “From April 6th, employees National Insurance will be cut by another 2p, from 10% to 8%.
“And self-employed National Insurance will be cut from 8% to 6%.
“It means an additional £450 a year for the average employee or £350 for someone self-employed.
“When combined with the autumn reductions, it means 27million employees will get an average tax cut of £900 a year and 2 million self-employed a tax cut averaging £650.
“Changes that make our system simpler and fairer.”
Spring Budget at a glance
Fuel duty will be frozen and the 5p cut extended for a year
Alcohol duty will be frozen until February next year
National insurance was cut by an additional 2p
An extension of the Household Support Fund for the fifth time
Households on Universal Credit will get an extra year to repay emergency loans from the Government
A new tax on vapes, which will cause prices to rise
A one-off new tax on fags to ensure they are more expensive than the electronic alternative
The high income child benefit charge was raised from £50,000 to £60,000
Calculator to find out how much better off you’ll be
The amount of NI you pay depends on your employment status and how much you earn.
To work out how much you’ll save when the changes come into force on April 6, use our calculator from tax experts at Blick Rothenberg.
It’ll also give you information on how much better off you are following the Budget depending on if you have children, a car and whether you drink or smoke.
The more detailed information you give, the more detailed responses you’ll get.
Naturally, national insurance works differently depending on if you’re an employee or self-employed.
If you’re employed the company you work for will deduct the tax and pay HMRC for you with your contributions noted on any payslip.
If you’re self-employed, you can pay your NICs online via the HMRC website through Self-Assessment.
Payments are usually due by January 31 and July 31 each tax year.
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