How much will National Insurance go up? The staggering amount you’ll pay to fund reform
National Insurance: Blackford criticises government plans
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Reforms to social care were a promise of the Conservative 2019 manifesto – and so was the insistence National Insurance tax wouldn’t be raised. But now, with billions needed to plug the leak-riddled social care scheme, Boris Johnson faces reneging on his word and the onslaught of criticism and punishment at the polls.
How much will National Insurance go up?
Reports suggest the Government is considering increasing the National Insurance rate by one percentage point.
With the starting rate for National Insurance contributions at 12 percent for lower earners, this would mean a rise to 13 percent.
This would mean a salary of £20,000 a year would pay an extra £104 in taxes, while someone on £50,000 would pay £404 more per year.
Here are some more examples:
- If you earn – £30,000 – per year, you’ll pay an additional – £204 – in tax
- If you earn – £50,000 – per year, you’ll pay an additional – £404 – in tax
- If you earn – £80,000 – per year, you’ll pay an additional – £704 – in tax
- If you earn – 100,000 – per year, you’ll pay an additional – 904 – in tax
Note these amounts are on top of the NI insurance you currently pay.
Who pays National Insurance?
National Insurance is paid by people who are employed, either by a company or self-employed.
The tax is paid either on earnings, or profits if you’re self-employed.
If you’re employed by somebody, you’ll start paying National Insurance when you’re earning just under £10,000 a year.
Then, you’ll pay 12 percent of earnings up to about £50,000 a year.
Above that point, you pay two percent of your earnings above 50,000, as well as the 12 percent.
What age do you stop paying National insurance?
You stop paying National Insurance when you reach State Pension age, even if you keep working.
You can check exactly when you’ll reach State Pension age by using the tool HERE.
Note that default retirement at the age of 65 no longer exists, but 66 is the average age for State Pension.
Why does National Insurance need to go up?
Major changes are needed to the social care system, which helps older and disabled people with day-to-day tasks such as washing, dressing, eating and medication.
The current system is under pressure after past governments failed to fund it properly or bring in reforms, with Age UK estimating 1.5 million people in England don’t get the help they need, and billions of pounds are now required to plug the gaps.
With the total cost of the social care package likely to be about £10bn a year once fully implemented, it would require a 2p in the pound increase in national insurance, with 1p extra levied on both the employee and employer rates.
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