National Insurance threshold has risen – what would further changes mean for you?

Jonathan Reynolds discusses the potential rise of National Insurance

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Employees in the UK pay National Insurance contributions on their earnings with employers collecting and forwarding said contributions to HMRC. Through National Insurance, workers earn the right to certain benefits, including the new state pension. According to The Telegraph, the Government is preparing to announce a tax hike on National Insurance to pay for social care costs and assist the NHS following the COVID-19 pandemic.

Reports suggest that Prime Minister Boris Johnson is looking to raise National Insurance by one percent next April to help fund the country’s health service.

However, Rishi Sunak and the Treasury are allegedly lobbying for a higher 1.25 percent increase on contributions.

This has proven to be controversial among the wider Conservative Party as Mr Johnson promised not to raise National Insurance as part of his winning manifesto during the 2019 Election.

Some experts believe the Prime Minister will force pensioners to pay National Insurance as well to pay for the NHS, which would cause further controversy.

In March 2021, the Government raised the National Insurance threshold from £8,632 to £9,500 a year, which saved around 31million employees upwards of £100 a year.

READ MORE: State pension warning: Triple lock is a ‘ticking time bomb’

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National Insurance: NI threshold has risen – what further changes mean for you (Image: GETTY)

There are different types of National Insurance contributions which depend on peoples’ employment status and how much they make.

The Class 1 type is paid by employees earning more than £184 a week who are under the state pension age, which is automatically deducted by their employer.

This comes to between £184 to £967 a week, or between £797 to £4,189 a month for employees.

Class 1A or 1B National Insurance is paid directly by employers on their workers’ expenses or benefits.


Self-employed people earning profits of £6,515 or more a year pay National Insurance on the Class 2 brand.

If they earn less than this amount, self-employed workers can choose to pay voluntary contributions to fill or avoid gaps in their National Insurance record through the Class 3 brand.

Anyone who is self-employed and earning over profits of £9,569 or more a year will pay under the Class 3 brand.

Any new bands are usually announced in the Chancellor of the Exchequer’s Budget or Autumn Statement.

Currently, National Insurance is paid at 12.5 percent of someone’s income, with high-income earners paying only two percent on salaries above £50,000 and pensioners not having to pay the tax.

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National Insurance: Government plans to raise amount paid on NI (Image: GETTY)

Taxpayers do not have to pay National Insurance when they reach the state pension age unless they are self-employed and pay Class 4 contributions.

In order to pay for the Government’s social care funding, some tax experts are pushing for pensioners to contribute towards the country’s National Insurance payments.

According to Shaun Moore, tax and financial planning expert at Quilter, the Government is being unfair to young people by pushing social care bills on to them.

“Boris Johnson will be keen to tick social care off his to-do list well before it becomes a contentious issue at the next general election,” he explained.

Mr Moore continued: “But he clearly hasn’t read the room since the plans were last floated and then shelved in July.

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National Insurance: NI contributions go towards certain benefits, such as the state pension (Image: EXPRESS.CO.UK)

“The Cabinet threatened a revolt then, and they are making the same threat now given the regressive nature of a hike in National Insurance.

“Those on lower incomes and the young will pay relatively more, and those working over state pension age pay nothing at all.

“The optics of such a proposal are not great. The PM had the time to go back to the drawing board over the summer recess but decided to make no changes.

“He could have instead favoured an increase in income tax, or a removal of the national insurance exemption for those above state pension age.

“Removing the national insurance exemption won’t raise that much in the grand scheme of things, but it would at least make it seem that everyone is in the same boat.”

Making those who continue to work past the state pension age pay National Insurance could see pensioners pay an extra £1,252 a year.

Harry Byrne

Harry Byrne

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