Changes to National Insurance explained
In April, the rate at which workers pay national insurance increased by 1.25 percentage points, from 12% to 13.25%. The increase is estimated to raise around £11bn in additional tax revenue to help fund the health and social care levy, providing much-needed money for the NHS.
Former Chancellor of the exchequer, Rishi Sunak went on to announce further changes to National Insurance contributions in this year's Spring statement, raising the threshold at which it becomes payable from £9,880 to £12,570. The change takes effect from the 6th of July and means that an estimated 7 in 10 workers who pay national insurance will be better off, even after accounting for the percentage points increase.
What is National Insurance and who has to pay it?
National Insurance is a type of tax and contributions are mandatory if you are over the age of 16 and either:
- Employed and earning in excess of £242 per week (from 6th July 2022)
- Self-employed and making a profit of at least £6,725 per year
National insurance contributions are pooled together to help fund certain state benefits such as the state pension, statutory sick pay and maternity leave.
Paying National Insurance contributions regularly can help you to qualify for a state pension as well as other benefits. You'll need a minimum of 10 years of contributions in order to qualify for the state pension with a total of 35 years required in order to receive a full State Pension. Shortfalls in qualifying years can be made up with voluntary contributions.
Once you reach the state pension age, you are no longer required to make National Insurance contributions.
National Insurance threshold changes - Will I be better off?
Put simply, those that earn around £35,000 or less are likely to be better off as a result of both the rate and threshold changes to national insurance. We've provided a simple table below that details the approximate national insurance you would have been paying per month prior to April, between April and the 6th of July and finally, from the 6th of July 2022 onwards. The table indicates the approximate change in how much you are likely to pay in national insurance contributions overall.
| Salary | Approx NI per month before 6th April 2022 | Approx NI per month between 6th April and 5th July 2022 | Approx NI per month from 6th July 2022 | Monthly Difference based on tax year 2021/22 |
| £20,000 | £104 | £112 | £82 | £22 less |
| £30,000 | £204 | £222 | £192 | £12 less |
| £40,000 | £304 | £333 | £303 | £1 less |
| £50,000 | £404 | £443 | £413 | £9 more |
| £60,000 | £423 | £472 | £443 | £20 more |
Figures provided by the Institute of Fiscal Studies
How to check my National Insurance contributions
Those wishing to see how much they are likely to pay following the recent change to the National Insurance thresholds can check using this simple tool on the Gov.UK website. For more information on tax and national insurance changes for the 2022/23 tax year, check out our article 'How much tax and National Insurance will I pay in 2022/23?' Additionally, if you are interested in viewing your National Insurance contribution record, you can check using this handy Gov.UK Tool.
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