The July salary statement may look better than last month as the threshold for starting National Health Insurance (NI) will be raised from Wednesday. Let's see what's happening.
–What's happening?
NI's starting threshold will rise from £ 9,880 to £ 12,570 starting July 6th. This means that many people will see more money on paid packets starting this month.
– Will I be better off?
This depends on the amount you earn and whether it is enough to meet the previous threshold. According to the UKgovernment
, the average employee will save more than £ 330 and benefit about 30 million workers in the year starting in July. However, the reduction follows an increase of 1.25 percentage points. April NI to support payments for health and social care.
The government says that 7 out of 10 workers (70%) who pay national premiums (NICs) will pay less, even after considering health and social care levies. I am saying.
Due to soaring daily prices of food and fuel, some households may not really feel good even if they have more money in their payment packets. Sarah Coles, Senior Personal Finance Analyst at
Hargreaves Lansdown, said:
According to Hargreaves Lansdown, a person earning £ 20,000 should have had an NI invoice of about £ 104 per month by April, but then rose to £ 112 and in July. It will drop to about £ 82 after the change.
Someone at £ 30,000 will pay about £ 204 a month by April, then rise to £ 222 and now fall to about £ 192.
With a salary of £ 40,000, I paid about £ 304 a month by April and saw this rise to £ 333. This will be about £ 303.
£ 50,000 people are about £ 413 / month from July, up from £ 404 four months ago, and those who earn £ 60,000 are £ 443 from July and £ 423 before April. Will increase. Hargreaves Slan's Down.
– What else is happening with people's tax payments?
Recent figures show that as wages rise over time, more people are being dragged into the higher tax rate range. According to HM Revenue and Customs andCustoms(HMRC) figures, about 6.1 million taxpayers will pay the income tax rate at a high tax rate of 40% or an additional tax rate of 45% in 2022/23. It is predicted.
In 2019/20, the total number of high-paying taxpayers and additional taxpayers was close to 4.3 million. In addition to being dragged into the higher tax rate range
, salary increases for many are well below inflation, which is expected to reach more than 10% in the coming months. increase. This means that the "purchasing power" of their wages is effectively eroded.
The government has also previously stated that taxpayers will earn an average of £ 175, thanks to the reduction in the base income tax rate in 2024.
– How else can you save tax?
Hargreaves Lansdown suggests consideringIsas. This includes Lifetime Isa if you are saving for your first home. Payments to the pension also call for tax exemption, the first 25% from the pension is usually tax exempt.
Some people are also eligible for a marriage allowance, says Hargreaves Slan's Down. Under certain conditions, low-income earners can apply to transfer one-tenth of their personal allowance to high-income earners, so they will pay taxes to those with lower incomes.
Becky O'Connor, Head of Pensions and Savings for Interactive Investors, also suggested that employer-provided payroll arrangements could be considered.
She states: "Salary sacrifices include exchanging part of the salary for other benefits such as bicycles, electric car leasing, and pensions.
" Estimates for income tax and national insurance purposes. Your salary will be reduced, so using it should reduce the amount you pay. "
– What other living expenses support is underway.
Supportis widespread and is specifically targeted at specific groups that may be struggling. As 2022 progresses, a harsh winter is expected.
On July 14, more than 8 million households will begin directing their living expenses to their bank accounts, with the first installment of £ 326 being paid to low-income households as a benefit.
The second part of the one-time £ 650 payment will continue this fall.
Pensioners' households receive £ 300 to cover their winter costs, and those with disability benefits receive an additional £ 150.
Households typically reduce energy costs by £ 400.