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• 31 million people to benefit from a tax cut, as National Insurance contributions thresholds to rise to 拢9,500 per year.
• A typical employee will pay around 拢104 less in 2020-21.
• Changes underline government鈥檚 commitments to ensure that work pays and put more money into the pockets of hard-working people.

A typical employee will save around 拢104 in 2020-21, while self-employed people, who pay a lower rate, will have 拢78 cut from their bill.

The government is today setting out the National Insurance thresholds for 2020-21, with the level at which taxpayers start to pay NICs rising by more than 10 per cent to 拢9,500 per year for both employed and self-employed people.

Chancellor of the Exchequer Sajid Javid said:

We鈥檙e determined to do what we promised and put more money into the pockets of ordinary hard-working people. That鈥檚 why we鈥檙e starting this government as we mean to go on, by cutting their bills.

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.

The government is committed to keeping tax low to ensure people keep more of what they earn. Ministers have pledged that the rates of income tax, National Insurance and VAT will not rise, and the government has set out an ambition to raise the National Insurance thresholds to 拢12,500, putting almost 拢500 a year into people鈥檚 pockets.

All the other thresholds for 2020-21 will rise with inflation, except for the upper NICs thresholds which will remain frozen at 拢50,000, as announced at Budget 2018.

The government is setting out all of the National Insurance contributions thresholds now to ensure individuals can, as promised, benefit from April 2020.

The threshold changes will not affect low earners鈥� entitlement to contributory benefits such as the State Pension, with the Lower Earnings Limit and Small Profits Threshold, above which individuals start building entitlement to contributory benefits, rising with the CPI measure of inflation.

Since 2010 the personal allowance, the level at which people start paying income tax, has risen from 拢6,475 to 拢12,500, an increase of over 90% in less than a decade.

The typical basic rate taxpayer now pays over 拢1,200 less income tax compared to 2010-11.

In addition to increasing the NICs threshold the Government will also end the freeze to working age benefits, which has been in place since 2016. From April 2020 the majority of working-age benefits will be uprated in line with inflation.

Further information

• The changes will be made through three separate SIs laid today: 鈥淭he Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2020鈥� ; 鈥淭he Social Security Benefits Up-rating Order 2020鈥� ; and 鈥淭he Tax Credits, Child Benefit and Guardian鈥檚 Allowance Up-rating Regulations 2020鈥�.