Reynolds discusses the potential rise of National Insurance
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Boris Johnson plans to increase National Insurance (NI) to fund social care and bring down NHS waiting lists in a major overhaul of the system. But just how much will this tax be raised? The rise could add hundreds of pounds a year to your tax bills.
Any rise in NI is expected to hit the working population of the UK the hardest.
Around 25 million working Brits are expected to be impacted by these new plans.
The Government has been blasted for breaking its 2019 election manifesto which said: “We promise not to raise the rates of income tax, National Insurance or VAT.”
The Government hasn’t outlined its final plans for the tax rise.
National insurance tax rise: Boris Johnson plans to increase National Insurance to fund social care (Image: GETTY)
National insurance tax rise: Downing Street allegedly backs a one percent rise (Image: GETTY)
Downing Street allegedly backs a one percent rise whilst the Treasury wants to see a figure as high as 1.25 percent according to a government source.
Sajid Javid is even said to be pushing for a two percent rise.
He believes the expected £10 billion raised from a one percent wouldn’t be enough according to The Times.
How does NI work?
When you’re employed NI is a tax taken from any wages received past £9,564 a year, or £184 per week.
National insurance tax rise: Sajid Javid is even said to be pushing for a two percent rise (Image: GETTY)
Working Brits pay 12 percent on earnings over this threshold and up to £50,268, or £967 a week.
NI is then increased by a further two percent on any earnings over £50,268.
How much more will you pay if NI rises by one percent?
The Accounting firm Blick Rothenberg explained how NI would increase if rates rise by one percent.
National insurance tax rise: The rise could add hundreds of pounds a year to your tax bills (Image: GETTY)
- On earnings of £10,000, the rise would be £4 a year more.
- For those earning £15,000, your NI would increase by £54 a year.
- If Brits earn a salary of £25,000 your NI would rise by £154 a year.
- If you earn £35,000 your tax bill would increase by £254 a year.
- If you are on a salary of, £50,000 it would go up by £404.
- Britons on an annual income of £75,000 will see a £654 yearly increase to their NI bill.
The rise comes at a time when the Government is facing criticism for cutting the £20 a week uplift in Universal Credit (UC).
Many have condemned the plan for protecting the inheritances of those with means.
While at the same time, ending the uplift of UC designed to help struggling Brits through the pandemic.
Trade union boss Frances O’Grady said it “wasn’t right” to target young and low-paid workers with a tax increase while “leaving the wealthy untouched”.
Brits over the state pension age do not pay NI and so would not be affected by the rise.
The rise will likely affect disproportionately millions of younger people.