Chancellor Rishi Sunak set out his Spring Statement on Wednesday which included a major change to National Insurance.

The Chancellor announced an increase in the National Insurance (NI) threshold for the 2022 to 2033 tax year and an increase in NI contributions. 

Mr Sunak also revealed a tax cut worth £1,000 for half a million small businesses and the removal of VAT on energy efficiency measures such as solar panels, heat pumps and insulation for five years.

Here's what the Chancellor said about National Insurance and how the Spring Statement could affect you.

National Insurance is due to rise by a 1.25 percentage point in April as a means of funding the NHS and social care.

While many have criticised the increase, stressing the current cost-of-living crisis with rising fuel and energy prices could be exacerbated, the Chancellor and the Prime Minister insisted it will go ahead.

The Money Saving Expert, Martin Lewis, has estimated that people will roughly be paying 10% more in National Insurance.

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It is not surprising that Chancellor decided against postponing the planned hike but he did make a compromise by raising the National Insurance threshold.

Mr Sunak announced a change to the National Insurance threshold and therefore shifting when you start making contributions.

What is the current national insurance threshold?

National Insurance contributions are taken from your salary before you get paid to fund services including healthcare, maternity, illness and bereavement pay, as well as the state pension.

You currently start paying contributions at £9600 a year with income tax starting at £12,600 a year.

From July, these two levels will be moved to the same rate which the Money Saving Expert described as "sensible".

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How will the New National Insurance Threshold affect you

You won't pay National Insurance until you earn £12,600 from July.

That is £3000 more than right now with a saving of £360.

If you earn between £9600 to £35,000, you will not pay any more or you'll even pay less National Insurance than you do currently.

The Chancellor has said that the announcement means that "70% of workers will pay less National Insurance even after the Health and Social Care levy."

In fact, the threshold rise will mean that 30 million people will pay less tax, according to The I.

Analysing the Spring Statement, Martin Lewis said that there is a breakeven point though. 

If you earn £35,000 a year, the levels balance out but if you earn more than that, "the two measures are a loss for you".

In a follow-up tweet, Lewis told his followers that he was "still double-checking" but those on Universal Credit could see half the gain from the increase in the National Insurance threshold.

When will national insurance rise?

National Insurance is due to rise from April 6 2022 and will last to at least the new tax year.

The tax year ends on April 5 2023.