Chancellor Rishi Sunak surprised many in his Budget by raising the threshold for National Insurance Contributions by nearly £1,000 from £8,632 to £9,500 although he left most income tax thresholds alone.

The confirmed NI change will take about 500,000 employees out of the tax altogether, says the Government.

Those earning more than £9,500 will be about £100 a year better off.

George Parker, assistant manager at leading tax advisory and accounting firm Blick Rothenberg said: “The changes to NIC allowances will save employees £104 a year, and self-employed individuals £78 a year. This is a great NIC boost to all.”

Steven Cameron, pensions director at Aegon, said he was pleased that the Chancellor confirmed that the increase in NI threshold will not affect state pension entitlements.

He said: “Confirmation that the Government is increasing the threshold for when National Insurance (NI) becomes payable to £9,500 is good news, saving 31m people across the UK up to £104 a year. This means those earning under £9,500 will pay no National Insurance whatsoever.

 “What’s doubly welcome is the confirmation that those taken out of paying NI won’t lose out on credits towards their state pension.”