Rishi Sunak reveals huge change to National Insurance worth £330 a year to low-income workers

RISHI Sunak today handed millions of Brits a boost as he softened the blow to low-income families from next month's National Insurance hike.

The Chancellor announced the earnings threshold at which people start paying the new health tax will be raised from £9,500 to £12,500, effectively taking people out of the hike.

It means hundreds of thousands of families will pay less – and some of the very lowest earners will dodge the extra charge altogether.

The move also brings the NI threshold into line with the point at which Brits start paying income tax, which stands at £12,500.

Mr Sunak unveiled the new move in his Spring Statement, which comes against the backdrop of a spiralling cost of living crisis.

He told the Commons the Government had planned to raise the NICS threshold by just £300 this year.

But he added because of the cost of living crisis: "I'm not going to do that, I'm going to increase it by the full £3,000."

He said the change would be "a £6bn personal tax cut for 30m people across the UK" and "the largest single personal tax cut in a decade".

The health and social care levy – which will see National Insurance go up by 1.25 percentage points to pay for the NHS – will still go ahead, he confirmed.

It will whack up someone's taxes for someone on £25,000 by around £150 – with those on higher wages paying more.

In today's Spring Statement, the Chancellor also announced:

  • Fuel duty cut by 5p per litre – saving families £3.30 every time they fill up their tank – from 6pm TONIGHT
  • National Insurance threshold to rise from £9,500 to £12,500 – worth over £330 a year – from JULY
  • Income tax rates will be cut from 20p to 19p in 2024
  • VAT slashed to 0% for insulation, heat pumps and solar panels in Brexit boost – comes in from April 2022 for five years
  • Extra £500million for hard-up Brits through the Household Support Fund – from April

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Mr Sunak added that it would be "a tax cut for employees worth over £330 a year".

But he defended his decision to defy calls from Tory MPs and Labour who wanted the hike scrapped altogether.

He said that it must stay because the NHS needs the cash and "if it goes then so does the funding, and that funding is needed now".

And he added: "It is right that the health and care levy stays, but a long term funding solution for the NHS and social care is not incompatible with reducing taxes on working families."

Hours before the Chancellor rose to speak UK inflation rocketed to a 30-year high of 6.2%, further squeezing family finances.

Mr Sunak said he understood the pressure households are under and pledged more support to help people through the cost of living crisis.

He announced a whopping 5p cut in fuel duty and announced plans to cut income tax in two years' time.


But the Chancellor resisted calls from many Tory MPs and Labour to scrap the National Insurance rise altogether.

The 1.25 percentage point increase is expected to raise £36 billion over the next three years.

Ministers say the cash will initially go into clearing the huge NHS backlog caused by the Covid pandemic.

Once that is sorted, the money raised will be used to fix Britain's broken social care system.

But the tax was dreamt up before the cost of living crisis, which has been exacerbated by the war in Ukraine.

Brits are facing rocketing food, energy, and petrol prices with inflation outstripping earnings.

Mr Sunak has increasingly insisted Britain must balance the books following the huge outlay on Covid mass testing and furlough.

But inflation has led to soaring tax revenues and is eating into government debt, leaving the Chancellor with room for manoeuvre.

New figures yesterday suggested the Exchequer will now have to borrow £30billion less than forecast this year.

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