Spring 2022 statement: Martin Lewis determines which salaries will lose money Business News

Money Saving Expert Martin Lewis has calculated which wages would be affected by the Chancellor’s spring statement announced yesterday.

In a video posted on social media, the personal finance expert explained to viewers the direct impacts of Rishi Sunak’s decision to raise the threshold at which workers start paying national insurance.

The moneysavingexpert.com founder shared his ‘initial gut reaction’ to Mr Sunak’s statement, saying the ‘big’ policy was about the National Insurance hike which had been ‘pre-announced and very controversial’.

The Chancellor said on Wednesday the National Insurance threshold would be raised by £3,000, so people will start paying tax when their income hits £12,570.

He said this will help offset the 1.25 percentage point rise in National Insurance contributions, due in April. National Insurance contributions are rising to raise additional funds for the NHS and social care.

Martin Lewis said that because of this April increase, “people will pay 10% more National Insurance because of this increase, roughly.”

He added: ‘To mitigate it, what the Chancellor has done is change the threshold at which you start paying it.

“So today you start paying National Insurance when you earn around £9,600 a year and you start paying income tax once you earn around £12,600 a year.

“From July, it moves so these two levels will be at the same pace, which makes sense.

“So that means you won’t be paying National Insurance now until you earn around £12,600 from July, which is £3,000 more than you are now.

“The saving on that is £360, but of course once you start paying National Insurance, because of the extra 1.25 percentage points people will pay, people will pay more.”

The savings expert estimated that if you earn between £9,600 and £35,000 you won’t pay more in National Insurance than you currently do, or if you’re at the bottom end you’ll pay less.

But if you earn more than £35,000, you’ll pay more because the 1.25 percentage point increase “trumps” the change in the starting threshold.

“The break-even point is around £35,000,” he said. “If you’re below that it’s a game, if you’re above that both metrics are a loss for you.”

Mr Sunak announced several measures in his spring statement on Wednesday to help households cope with the cost of living crisis, including a 5p cut in fuel taxes, the abolition of VAT on energy green and £500m household support for middle to low income earners.

As energy prices hit record highs, Mr Lewis criticized the ‘not particularly generous’ support being offered to help families manage their energy bills and tweeted that his ‘head sank’ when he heard Mr. Sunak’s energy announcement.