Chancellor Sajid Javid has today confirmed the government will raise the threshold for National Insurance contributions (NICs) from April, saving the average worker more than £100.
The threshold at which people start paying NICs will be raised by more than 10 per cent to £9,500, according to new legislation laid in parliament today.
It was one of the centre points of the Conservative manifesto on tax cuts, announced by the Prime Minister somewhat on the hoof during a Q&A following one of his many campaign speeches.
A typical employee will save around £104 in 2020-21, while self-employed people, who pay a lower rate, will have £78 cut from their bill.
The government claim it is key to their promise of “levelling up” the country. However critics point out it is not the most effective ways to do so.
The Institute for Fiscal Studies argues that the largest proportional gains will go to middle-income and upper-income earners. Households nearer the bottom typically would get a larger share of their income from benefits, which meant they would not feel as much of an impact.
Javid said: “We’re determined to do what we promised and put more money into the pockets of ordinary hard-working people. That’s why we’re starting this government as we mean to go on, by cutting their bills.
“We want everyone to feel that they can contribute to the new chapter we are opening for the economy and our country, because under this Government work will always pay.”