National insurance payments go towards funding the likes of the NHS (Picture: Getty)
The plan has promised to include detail of how the Government will fund the energy price cap for households and businesses, as well as the measures that will help fulfil Prime Minister Liz Truss’ tax-slashing promises.
One such promise that had already been confirmed ahead of the budget was the reversal of the rise in National Insurance, cancelling the 1.25 percentage point increase imposed by Rishi Sunak when he was chancellor.
Mr Kwarteng said: ‘Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy.
‘Cutting tax is crucial to this – and whether businesses reinvest freed-up cash into new machinery, lower prices on shop floors or increased staff wages, the reversal of the levy will help them grow, whilst also allowing the British public to keep more of what they earn.’
But when do you actually start paying National Insurnace, and how do you know how much it is that you will be paying?
When do you start paying National Insurance?
You start paying for National Insurance if you’re over 16 years old and earn or have self-employed profits over a certain amount.
You have to pay mandatory NI if you are:
An employee earning above £242 a weekSelf-employed and making a profit of £6,725 or more a year
National Insurance is a tax on your earnings that go towards funding the likes of the NHS, pension schemes, unemployment benefit and sickness and disability allowances.
If you are paid through a Pay As You Earn (PAYE) system, NI contributions are automatically deducted from your salary, so you won’t need to do anything to ensure you’re paying it.
You should see your NI contribution deducted from your pay cheque.
If you’re self-employed, then your NI contributions will be calculated based on your Self Assessment tax return.
How much National Insurance do you pay?
The amount of National Insurance you pay depends on your employment status and how much you earn.
Employers also pay NI at a different rate, depending on the earnings of their employees.
Chancellor of the Exchequer Kwasi Kwarteng reversed the National Insurance rise imposed by his predecessor Rishi Sunak (Picture: Aaron Chown/PA)
The 1.25 percentage point increase in National Insurance in April put the NI rates at 13.25% – if you earn £242 to £967 a week.
This will go back down to 12% from November 6 following the Chancellor’s announcement to reverse the rise.
The government has said that the decision will help almost 28 million people keep an extra £330 of their money on average next year, while 920,000 businesses are set to save almost £10,000 on average.
You can use a calculator from Which? to help get an estimate on how the changes to National Insurance will affect you and how much you will pay.
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