‘Difficult months ahead!’ National Insurance to rise this week – how much will you pay?

Nigel Farage calls for National Insurance rise to be scrapped

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New research from Nerdwallet has found that when the tax rise was initially announced, around 67 percent of households were already struggling with their budgets. The personal finance company believes many people in the country will “face difficult months ahead” due to the changes to National Insurance. With inflation and energy bills soaring, the National Insurance increase is set to add further pressure to those who are already finding it difficult to make ends meet.

National Insurance will increase to 13.25 percent for people earning between £184 and £967 a week later this week.

These changes will be implemented by the Government on April 6, 2022 and will return to current levels on April 5, 2023.

As a result, anyone who earns more than £9,880 a year will pay 1.25 pence more in the pound. However, from July the point at which employees start paying will increase to £12,570.

Under the new plans, people on these salaries will see their National Insurance rise by the following amounts:

Recently, Rishi Sunak announced the National Insurance threshold would rise by £3,000, which will mean some households will not have to pay as much in National Insurance.

In his Spring Statement to the House of Commons, Mr Sunak referred to the decision as the “largest personal tax cut in a decade”.

However, this will not come into effect until July which means lower income families face higher National Insurance for a couple of months.

Connor Campbell, a personal finance expert at NerdWallet, warned Britons about the dangers of being unaware of how the upcoming tax changes will affect their households’ budgets.

Mr Campbell added: “There was no last-minute reprieve in the Spring Statement for the National Insurance increase, which will still come into effect in April.

“As a result, it remains important that households understand the impact that this will have on their pay packets and factor this into their budgets when planning their finances.

“The decision to lower the National Insurance threshold will benefit 70 percent of employees but this will not come into effect until July so there could still be some difficult months ahead for household finances.

“Ultimately the impact of this change will depend on your income so it is worth getting to grips with how you will be affected as soon as possible.”

The rise in National Insurance contributions will act as a test run to the upcoming Health and Social Care Levy, which will be introduced next year.

This brand new tax has proven to be controversial as it will also be paid by pensioners in comparison to National Insurance, which is solely paid by working-age people.

Last year, the Chancellor Rishi Sunak outlined the Government’s plan to hike National Insurance payments on workers and employers by 1.25 percentage points.

This tax rise will fund the Government’s social care plans ahead of the Health and Social Care Levy which will be introduced next year.

Workers pay National Insurance via their wages, while their employers make contributions on their behalf.

People who are self-employed pay National Insurance on any profits that they make.

It should be noted that the Chancellor has promised to return the rate of National Insurance to what it currently is at in April 2023.

However, by that point, taxpayers will have to pay the extra Health and Social Care Levy on top of making National Insurance contributions.

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