National Insurance: How much more you will pay as tax hike looms | Personal Finance | Finance
For thousands of people, tax hike will put a squeeze on finances and the cost of living increases, and energy bills rise. From April, the average worker will pay an extra £255 a year in taxes.
Those earning £20,000 a year will pay an extra £89 and higher earners on £50,000 per year would pay an extra £464.
This tax rise will then turn into a health and social care levy from 2023, which all employees will contribute towards – including working pensioners.
All workers, including the self-employed, will all pay 1.25p more per pound in National Insurance.
Working adults, including those over state pension age will have to reckon with a 1.25 percentage point rise to the levy.
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The proposal is predicted to raise £12 billion annually.
National Insurance is used to pay for the NHS, state benefits and the State Pension.
The amount of National Insurance someone pays is dependent on their salary, however people earning under £9,568 don’t have to pay National Insurance and won’t have to contribute.
Salary and new National Insurance Contribution
- £20,000 – will pay an extra £130 a year (£10.80 per month)
- £30,000 – will pay an extra £255 a year (£21.25 per month)
- £50,000 – will pay an extra £505 a year (£45.80 per month)
- £80,000 – will pay an extra £880 a year (£73.33 per month)
- £100,000 – will pay an extra £1,130 a year (£94.16 per month)
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National Insurance is paid by workers between the ages of 16 and the state pension age (currently 66), and by their employers.
It is a form of social security, and some benefits can only be paid if the claimant has contributed enough to National Insurance during their lifetime.
The rate varies depending on someone’s earnings.
But the standard rate for employees earning between £184 and £967 per week is 12 percent of their earnings.
Self-employed workers must pay £3 per week, or more if their profit is above £8,632 per year.
When the tax hike was announced, Prime Minister Boris Johnson said: “This will raise almost £36billion over the next three years, with money from the levy going directly to health and social care across the whole of our UK.”
Initially, the money will go to the NHS to help it deal with the pandemic backlog.
Thereafter, the Government says it will redirect the money into social care.
