The 1.25 percentage point increase, first announced last fall, is being introduced despite pressure to postpone it due to wider pressures on the cost of living – with energy, fuel and food bills rising. It means that annual earnings above 8 9,880 £ will be required for 13.25% NI contributions. Above a higher limit of £ 50,270, the percentage will be 3.25%. A person working full time with a minimum wage earns almost .000 20,000. Today they pay 25 1,252 £ annually to National Insurance. The previously announced increase of 1.25% means that those with the minimum wage would have paid an additional £ 89 per year, bringing the total NI payments to 34 1,341. The Spring Statement decision to raise the threshold for people paying National Insurance means that those on the minimum wage will now pay £ 267 less in NI than last year. Employers also pay National Insurance – and this percentage increases by 1.25 percentage points as well. Critics call it a job tax and warn that it could lead companies to raise prices or push up wages. An initial assessment by HM Revenue and Customs after the policy announcement estimated that 29 million workers would be in worse shape as a result of the measure. However, further changes announced in last month’s spring statement will reduce tax bills. They will see the NI payment start limit increase from 9. 9,880 to .5 12,570 from July. The Institute for Financial Studies (IFS) estimates that, given the increase in interest rates and the increase in the limit together, it will mean a drop in the National Insurance account for those earning less than .000 35,000 for the tax year 2022/23 compared to the previous year . Those who win more than .000 35,000 will pay more, IFS estimates. The government says its policy will mean a 39 39 billion investment in health and social care over the next three years. It points to the need to address the NHS waiting list, which exceeds six million and is expected to increase further due to the influx of patients who were reluctant to seek treatment during the pandemic. The new tax levy is also designed to help make social care more affordable. The cost of lifelong care will be reduced to .000 86,000 from October next year. There will also be a change in the assessment of the individual assets that individuals must have in order to be eligible for assistance with care costs. Currently, only those with assets less than .2 23,250 receive assistance. This will rise to .000 100,000, also from October next year. Prime Minister Boris Johnson said the contribution was the “necessary, fair and responsible next step, providing our health and care system with the long-term funding it needs as we recover from the pandemic.” “This government will not shy away from the difficult decisions we have to make to fix our social care system and reduce NHS waiting times,” said Chancellor Rishi Sunak. The Conservative 2019 election manifesto pledged “not to raise rates of income tax, national security or VAT”, but it has been argued that the promise was made before the pandemic. The Office for Budget Responsibility (OBR) now predicts that the total tax burden as a percentage of GDP by 2026/27 will be at its highest level since the late 1940s.
