What National Insurance change means for average Lancaster worker

The Government's new National Insurance plan means the average Lancaster worker will be paying less per year from July, figures suggest.

By Debbie Butler
Monday, 28th March 2022, 3:36 pm

Nearly 30 million UK workers will see their taxes cut following Chancellor Rishi Sunak's raising of the NI earnings threshold, though a think tank said over one million Britons will be on the verge of "absolute poverty" due to the rising cost of living.

Figures from the Office for National Statistics show the median salary for full-time workers living in Lancaster was £31,121 in 2021.

Currently, employees pay National Insurance on 12% of their annual earnings over £9,568, meaning a worker on this wage would pay £2,586 – around £216 per month.

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Chancellor of the Exchequer Rishi Sunak leaves 11 Downing Street as he heads to the House of Commons, London, to deliver his Spring Statement.

It was previously announced that NI rates will rise to 13.25% for one year from April 6 – to raise funds which will be ring-fenced for health and social care.

This means the average full-time Lancaster worker will pay £22 more for a few months.

But in his spring statement, Mr Sunak announced that the earnings threshold will rise to £12,570 from July to mitigate the increasing cost of living, meaning a Lancaster worker earning the median salary for the area will pay £128 less per year than they do now – £2,458.

This is compared to £2,263 across the North West as a whole, where the median salary for full-time employees is £29,655.

Mr Sunak said it was “a £6 billion cut in personal tax for 30 million people across the United Kingdom, a tax cut for employees worth over £330 a year”.

The Chancellor added that around 70% of workers would have their tax cut by more than the increase coming in April.

Further measures unveiled include a 5p cut in fuel duty and a pledge to cut the basic rate of income tax from 20p in the pound to 19p in 2024.

However, the Resolution Foundation said the “big but poorly targeted policy package” does not do enough to aid the families who have been hit the hardest by the cost of living crisis.

It estimates that 1.3 million Britons are set to fall below the poverty line next year, including 500,000 children.

It also determined that only one in eight workers will actually see their tax bills fall by the end of the parliament.