Budget 2020: Millions of Brits to save £104 a year under new National Insurance rules
From April, both employees and the self-employed won’t have to pay National Insurance Contributions until they earn an annual salary of £9,500, up from the current threshold of £8,632.
The tax cut is expected to save the average employee £104 a year and the average self-employed person £78.
Those earning less than £9,500 will not pay National Insurance whatsoever.
Anyone taken out of paying National Insurance won’t lose out on credits towards their state pension.
Steven Cameron, pensions director at Aegon, said: “This is important because people need at least 10 years’ credits to receive any state pension and 35 years to receive the full state pension which is expected to rise to £175.20 a week from April.
“Without this provision, people might have gained from paying less National Insurance today only to suffer from a reduced state pension in future.”
Rishi Sunak also confirmed a 6.2% increase to the National Living Wage to £8.72 an hour from this April.
Nic Redfern from Know Your Money said: “Small businesses and organisations also benefited from changes to national insurance in the Budget. The government increased the maximum Employment Allowance to £4,000, which means employers won’t need to pay as much in National Insurance Contributions, if any.
“This increase will particularly benefit small and micro-businesses, as it reduces the cost of taking on new employees and so can encourage them to grow their team.”