National Insurance threshold increase to £12,570 could see people lose access to vital credits for State Pension

dailyrecord.co.uk:

Rishi Sunak has announced that the National Insurance Contributions starting threshold will rise by £3,000 to £12,570 from July, meaning employees across the UK will keep more of what they earn before they have to start paying personal tax.The cut, worth over £6 billion, will benefit almost 30 million working people with a typical employee saving over £330 in the year from July 1.The Chancellor hailed it as the single biggest tax cut for a decade.

He said: "Around 70 per cent of all workers will have their taxes cut by more than the amount they'll pay through the new levy."It means that employees will now start paying National Insurance on earnings above £12,570 a year - up from a planned £9,880 a year from April 6 and will take some of the lowest earners out of paying the tax.However, in April 2022 the Health and Social care levy comes into effect, this is a 1.25 percentage point increase on National Insurance Contributions designed to support the NHS across the UK.The Chancellor had been under pressure to scrap the increase in the face of the rising cost of living crisis, but instead opted to soften the blow by raising the threshold at which people start paying National Insurance.However, by lifting the threshold, Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, warns that care must be taken that workers earning less than £12,570 per year do not lose access to vital National Insurance credits for their State Pension.Helen explained: “The State Pension forms the backbone of most people’s retirement and therefore, they should ensure they do not incur gaps unnecessarily, which means they end up with less in retirement.“Many benefits come with automatic National Insurance credits.