Tax rise coming for working Brits – how much more will you pay?
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National Insurance is to be increased across the board to pay for social care reform. An announcement is expected as soon as next week when parliament returns from its summer recess as the huge NHS backlog caused by the pandemic reaches new levels.
NHS representatives have said that a boost of anything less than £10 billion per year will result in a fall in the quality of hospital care and waiting lists becoming unmanageable.
Without a significant rise, waiting lists for hospital treatment could rise by 150,000 per month.
The intervention is intended to put pressure on Downing Street, the Treasury and the Department of Health and Social Care, where ministers and officials are finalising how much money the NHS will be given over the next three years.
Boris Johnson has broken a key 2019 manifesto pledge stating there would be no increase to the rate of income tax, VAT, or national insurance within five years of the Government forming by reportedly committing to the hike.
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How much more will you have to pay?
The actual amount National Insurance will rise by is still being decided by the Government.
According to reports, Health Secretary Sajid Javid is pushing for a two percent increase, while Chancellor Rishi Sunak does not want an increase of anything more than one percent.
Number 10 is reportedly also in agreement with Mr Sunak, with sights on a one percent rise.
A one percent rise would raise £10 billion for the treasury, and two percent would raise £20 billion.
For the average person on a PAYE contract pays Class 1 National Insurance contributions, and the amount depends on how much you earn.
Class 1 contributions are 12 percent for employees who earn £184 to £967 a week.
This is then increased with a rate of two percent for people earning more than £967 per week.
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For those in the lower band, an increase to 13 percent is coming if Mr Sunak gets his way.
But if Mr Javid makes the call, an increase to 14 percent of salary will be taken from the lower band.
For example, an employee on a £40,000 salary would pay £380 more than they do now if the rate is increased by the higher amount.
But Justice Secretary Robert Buckland insisted no decisions had been made and stressed the need for reforms to be “resilient for the long-term”.
He said: “This isn’t just a change for a Parliament, this has got be a generational change.
“We know the challenge, the work is going on and I’m sure that we’ll hear the outcomes very soon.
“No final decisions have been made.”
“We will work as quickly as possible in order to get that certainty that I think so many people have been looking for for so long.”
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