Some 31 million working Brits will get a tax cut worth £104 thanks to measures to be confirmed in the Budget.
Employees will see their take home pay rise thanks to a new National Insurance threshold coming into force in April, Chancellor Rishi Sunak is set to confirm.
It means the 12% National Insurance deductions from salaries won't apply to the first £9,500 you earn each year – up from £8,632 at the moment.
People paying the lower rate charged to self-employed Brits won't save quite as much as a result of the changes, but still pay £78 less tax.
Steven Cameron, Aegon pensions director, said: “Confirmation that the Government is increasing the threshold for when National Insurance becomes payable to £9,500 is good news, saving 31 million people across the UK up to £104 a year. This means those earning under £9,500 will pay no National Insurance whatsoever."
For people worried that this could affect their pension, there was even more good news – with the amount you need to earn to qualify for a National Insurance credit only rising by inflation.
All the other thresholds for 2020-21 will also rise with inflation, except for the upper National Insurance contribution thresholds that will remain frozen at £50,000, as announced in the 2018 Budget.
"What’s doubly welcome is the confirmation that those taken out of paying National Insurance won’t lose out on credits towards their state pension," Cameron 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 NI today only to suffer from a reduced state pension in future.”
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