Following Rishi Sunak's spring budget announcement yesterday (March 23), it was revealed that some workers will pay less for their National Insurance contributions this year. But, some workers may end up paying more as a result of the announcement that the threshold at which workers pay NI will rise to £12,570 in July. The £3,000 increase means anyone earning less than the new threshold will not pay any NI.

The Treasury claims this will save a "typical" worker £330 a year and benefit around 30 million workers. But previous changes made to NI could mean workers will still pay more overall. Contribution earning over the threshold will see an increase of 1.25 percentage points in April, going from 12 per cent to 13.25 per cent, Hull Live reports.

Ministers claim the hike would help fork the cost of finances that have hit the NHS and social care sector in the past couple of years. Currently, most employees pay 12 per cent NI on any income between £9,568 and £50,270 then 2 per cent on anything above £50,270.

Adjusting for the changes to both the rates and threshold, a worker will now have 13.25% taken off earnings between £12,570, and 3.25% off anything over that.

Here’s a rough breakdown of what the changes mean based on the average salary:

Annual gross salary: // Change in annual NI contributions (2022-23)
£15,000 // -£240.76
£20,000 // -£178.26
£25,000 // -£115.76
£30,000 // -£53.26
£35,000 // £9.24
£40,000 // £71.74
£45,000 // £134.24
£50,000 // £196.74
£55,000 // £259.24
£60,000 // £321.74

Mr Sunak also announced a planned reduction in the basic rate of income tax from 20p to 19p in the pound to come into effect in 2024. But there have been previous announcements on the freezing of income tax threshold.

The Institute for Fiscal Studies (IFS), which researches tax policy, said the combination of adjustments amounts to "giving with one hand in tax, having previously taken away with the other".

Tom Waters, a senior research economist at the IFS, said: “When all is said and done, the reforms imply a greater level of tax for almost all workers – especially those on higher earnings. “In the nearer term, many households are likely to see real-terms declines in their incomes with both earnings and benefits failing to keep up with inflation.”

Unveiling his plans, Mr Sunak said they would “put billions back into the pockets of people across the UK”. He added: “Cutting taxes means people have immediate help with the rising cost of living, businesses have better conditions to invest and grow tomorrow, and people keep more of what they earn for years to come.”