From April this year, Britons earning £30,000 will be forced to fork out an extra £255 in National Insurance a year. This has worried commentators who say it’s going to hurt particularly as many people are already struggling with the higher cost of living and rising energy bills.
The prime minister and chancellor said the rise is necessary to pay for the NHS and social care, but commentators are concerned that those on an average income will be hit hard.
Income Tax UK has found that lower and average earners will be squeezed the most and those earning around £30,000 will lose nine percent of their salary to National Insurance.
A spokesperson said: “This data gives us a compelling insight into the fact that lower and average earners will be significantly more squeezed by the National Insurance hike than those at the very top.”
Under the new plans, employees, employers and the self-employed will all pay 1.25p more in the pound for National Insurance from April 2022 for a year.
However, low income earners and Britons on an average salary will end up paying a bigger proportion of their pay packet.
An Income Tax UK spokesperson said: “People earning some of the highest salaries in the country, for example, workers on £100,000 a year are set to pay the same percentage of their salary to National Insurance as a person on £20,000 in 2022, despite earning five times as much.
“Those earning the average wage of £30,000 will see as much as nine percent of their salary swallowed by National Insurance.”
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How much National Insurance will I pay?
Salary of £20,000 – workers will pay an additional £130
Between £30,000 and £50,000 – National Insurance payments will increase by £255 and £505 annually, respectively
£80,000 or more a year – Britons will have to find an extra £880 in National Insurance during 2022
Over £100,000 – National Insurance contributions will soar by £1,130
Despite demands to abandon or postpone the National Insurance hike, it looks like the Government is ploughing ahead with its plans which will come into force in April 2022.
Millions of Britons will see their National Insurance contributions rise by 1.25 percent from April and that will mean some will struggle much more than others depending on their pay bracket.
As well as hurting lower paid workers the most, it could also contribute to increasing inflation.
British families are already struggling to meet the higher cost of living with inflation at a 30-year high.
Charities fear that the financial pressure is crippling Britons whose wages aren’t keeping up with the pace.
The Institute for Fiscal Studies (IFS) said the problem is people’s pay packets are not keeping up with higher everyday costs such as energy bills.
Furthermore, the energy price cap is expected to increase again in April, with energy bills estimated to rise a further 50 percent.
It’s the same problem for those claiming benefits, the 3.1 percent increase which is coming into effect this year won’t compensate for pricier food, bills and taxes.