The National Insurance Contributions (NICs) threshold will increase to £9,500 per year from April 2020, the Government has confirmed.
It means that a typical employee will pay around £104 less in the 2020/21 tax year, while the self-employed will pay around £78 less over the same period.
Representing a 10 per cent rise to the threshold, the Chancellor of the Exchequer Sajid Javid said the Government was determined to “put money into the pockets of ordinary hard-working people”.
“We want everyone to feel that they can contribute to the new chapter we are opening for the economy and our country, because under this Government work will always pay,” he said.
The announcement follows news that rates of income tax, NICs and VAT will remain the same. The upper NIC threshold, meanwhile, will also be frozen at £50,000 as set out at Budget 2018.
According to the Government, the combined impact of personal tax changes mean that a basic rate taxpayer now pays £1,200 less income tax compared to 2010/11.
Around 2.8 million workers will also receive a pay rise from April 2020, as the National Living Wage (NLW) increases by 6.2 per cent from £8.21 to £8.72 for workers over the age of 25.
Commenting on the new rates, Mr Javid said: “We want to end low pay and put more money in the pockets of hard-working families. This latest rise will mean that since we introduced the National Living Wage in 2016, the lowest paid will have had a wage increase of more than £3,600.”
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