Boris Johnson says workers will not have to pay National Insurance until they earn £12,000 if the Conservatives are elected to power.
Answering questions in Teesside, the prime minister promised his party would ensure “low tax for working people”.
The current threshold sees workers paying National Insurance contributions once they earn £8,628 a year.
Mr Johnson had promised to raise the threshold to £12,500 during the Tory leadership contest.
That pledge could see workers saving up to £465 a year.
The Institute for Fiscal Studies had estimated the proposed rise to £12,500 – which would would match the threshold where workers start paying income tax – would cost £11bn.
On a visit to an engineering plant, Mr Johnson was asked by one of the workers whether his pledges for low tax were “for people like you… or people like us”.
The PM said: “I mean low tax for people… working people.
“We are going to be cutting national insurance up to £12,000 [and] we are going to be making sure that we cut business rates for small businesses. We are cutting tax for working people.”
Has Boris Johnson just accidentally revealed his big election tax pledge? It sounds like it.
Mr Johnson was asked an awkward question about whether tax cuts would be for people like him.
And he blurted out that he was going to cut National Insurance payments so people didn’t have to pay until they reached £12,000.
Cue a lot of excited hacks and less excited advisers.
We still don’t have full details. But it looks the threshold would go up to £9,500 next year, with the ultimate ambition over time to raise it to £12,500.
That’s a big saving for most of us – over £400 a year.
What is National Insurance?
National Insurance is a tax paid by workers and the self-employed who are over 16, with the amount varying depending on how much you earn.
Employers do make some contributions on behalf of their workers, but it again depends on how much they are paid.
For employees, it is taken straight out of your salary before you receive it, while self-employed people need to pay as part of their self-assessment.
By paying the tax, you are entitled to a number of benefits, such as a state pension, Jobseeker’s Allowance and maternity pay.
The contributions cover these benefits, with some also going towards the NHS.
Where do the other parties stand on National Insurance?
The Liberal Democrats announced in their manifesto earlier that they plan to review the tax and National Insurance status of employees, dependent contractors and freelancers “to ensure fair and comparable treatment” and to “modernise rights to make them fit for the age of the gig economy”.
The Green Party also pledged in their manifesto – launched earlier this week – that they wanted to merge employees’ National Insurance, capital gains tax, inheritance tax, dividend tax and income tax into a single consolidated income tax, claiming it would “close loopholes” and bring in an additional £20bn to the public purse.
Labour has yet to publish its manifesto, but in an announcement about its plans for the “Living Wage” earlier this month, the party pledged not to raise income tax or National Insurance contributions for the bottom 95% of earners.
The SNP says on its website it would oppose any increases in National Insurance.