Social Security payments will rise 1.25 percentage points from 12% to 13.25% from April 6 – but the threshold to start paying will also rise, albeit not until July
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Workers will pay more into Social Security starting next week as an increase in the taxes they pay goes into effect.
Social Security payments will increase by 1.25 percentage points from April 6, from 12% to 13.25%.
At the moment you pay Social Security for earnings over £9,568 a year, but the threshold to start paying increases to £9,880 from next week.
The rate at which you start paying will then rise back up to £12,570 – but not before July 6 – meaning more low-income workers will be keeping more wages in their pockets, although not for a few yet Months.
According to HM Treasury, the increase will save the “typical worker” around £330 a year and benefit nearly 30 million working people.
It says 70% of those who pay National Insurance will pay less from July, while 2.2 million people will pay nothing at all.
For earnings over £50,270, the rate at which you pay National Insurance increases by 1.25 percentage points to 3.25% next week, up from 2%.
Will you pay more or less into Social Security?
According to MoneySavingExpert Martin Lewis, the point at which you’ll have to pay more Social Security after July is around £35,000.
“If you’re under it [amount]that’s a win if you’re over it [amount]then the two measures are a loss for you,” he said in a video posted to Twitter.
Martin added: “Effectively it works with earnings from over £9,600 up to around £35,000, you either don’t pay more or you pay less [the pay scale]pays less social security than it currently does.
“If you earn £35,000 or more, the 1.25 percentage point increase outweighs the change in the starting threshold, so you have to pay more Social Security.”
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How much more or less you pay into Social Security depends on your current salary.
Someone making £30,000 a year is currently paying £204.25 a month in National Insurance contributions.
This will rise to £222.15 a month from April when the 1.25 percentage point increase takes place, but in July – when the threshold is raised for the second time – they will start paying £192.46.
For someone making £100,000 a year, they are currently paying £489.90 a month to Social Security.
But from April this will increase to £580.65 per month before falling to £548.71 per month in July.
Here’s how your Social Security is changing, according to numbers from the Institute For Fiscal Studies:
- £20,000 annual salary: NIC now – £104; NIC April 6th – £112; NIC July 6th – £82
- £30,000 annual salary: NIC now – £204; NIC April 6th – £222; NIC 6th July – £192
£40,000 annual salary: NIC now – £304; NIC April 6th – £333; NIC July 6th – £303
£50,000 annual salary: NIC now – £404; NIC April 6 – £443; NIC July 6th – £413
£60,000 annual salary: NIC now – £423; NIC April 6th – £472; NIC July 6th – £443
£70,000 annual salary: NIC now – £440; NIC April 6th – £499; NIC July 6th – £470
£80,000 annual salary: NIC now – £457; NIC April 6 – £526; NIC July 6th – £497
£90,000 annual salary: NIC now – £473; NIC April 6th – £554; NIC July 6th – £524
£100,000 annual salary: NIC now – £490; NIC April 6th – £581; NIC July 6th – £551
Social security is an income tax paid by both employees and the self-employed. It allows workers to qualify for certain benefits and the state pension.
You pay Compulsory National Insurance if you’re 16 or over and are either an employee earning over £184 a week or are self-employed making a profit of £6,515 or more a year.
Once you reach statutory retirement age, you no longer have to pay social security contributions.
If you have an employer or are self-employed but work for an employer, you pay Class 1 Social Security contributions.
The amount you pay into Social Security is then calculated based on your gross income before taxes or pension deductions above certain thresholds.
How to cut your social security bill
If your company offers a pension contribution wage-waiver program, you can trim your Social Security bill by contributing more to your pension.
Wage cut programs effectively cut your pay and add money to your pension, which is both income tax and National Insurance exempt.
It, in turn, gives your retirement a boost, leaving you with more money later in life.
The idea is that by forgoing a portion of your paycheck, you reduce the amount you receive – which reduces the amount of income tax and Social Security you have to pay.
Remember, as the name suggests, you will effectively be reducing your monthly salary – but in some cases it can make financial sense.
https://www.mirror.co.uk/money/workers-hit-national-insurance-hike-26611950 Workers hit by Social Security hike next week - how much more or less you'll pay