Millions of Brits to see more money going into their bank accounts next week

A lot of us are still penny-pinching following the expense of the festive period and the wait for our January wages has been testing, to say the least.

But the good news is your employer will be paying up very soon - and you might notice that your bank balance looks a lot healthier than usual.

Millions of Brits will soon be enjoying the benefit of a larger budget after the changes to National Insurance rates came into effect on 6 January.

You may recall that back in November last year, the government announced that the amount we fork out in contribution to the state each month would be reduced. Hooray!

Working Brits get charged for National Insurance similarly to income tax, except the money is allocated towards some of the safety nets built into society – like pensions, Jobseeker’s Allowance and Maternity Allowance.

If you’re a salaried employee then you’ll be paying into all of them, whereas cash from people who are self-employed only goes towards some.

But either way, a lot of people will be happy to hear that the majority of people will now have a bit of extra cash to play with, as the main rate has been knocked down from 12 to 10 percent.

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Before the change kicked in, you would have paid no National Insurance on the first £242 you earn in a week and 12 percent of whatever you earn between £242.01 and £967.

If you earn anything over that a week then it's another two percent beyond that.

For example, if you earned £1,000 a week (get you) then you'd pay nothing on the first £242, £87 as your main rate of National Insurance and then an extra 66p on that final chunk of weekly earnings.

So, in that above example the reduction means the person earning £1,000 a week would now pay £72.50 on their earnings between £242.01 and £967, meaning they'd have an extra £14.50 in their pocket each week.

For Brits over a year, the average UK salary is £35,000 so this change will save the average of Brits about £450 a year.

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The change will impact 27 million people aged between 16 and the state pension age, as Brits who work beyond pension age no longer pay National Insurance.

It's certainly some good news in the midst of a cost of living crisis and will give millions of people a welcome financial boost - although money moguls reckon we should use it to invest in the future.

Research by accountants Evelyn Partners found that young workers could end up with over £100,000 extra in their retirement funds if they start prioritising it now - so they suggested we should divert the cash straight to our pension pots.

Martin Lewis made a similar point earlier this week when he revealed how much people in their 20s and 30s should be contributing to them each month.

But hey, you deserve a treat too.

Topics: Money, News, UK News, Cost of Living

Olivia Burke

Olivia is a journalist at LADbible Group with more than five years of experience and has worked for a number of top publishers, including News UK. She also enjoys writing food reviews (as well as the eating part). She is a stereotypical reality TV addict, but still finds time for a serious documentary.

@livburke_