September 25, 2021

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How much is National Insurance going up by? Prime Minister plans to hike contributions

How much is National Insurance going up by? Prime Minister plans to hike contributions
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If you’ve been following today’s news, you have probably come across the Prime Minister’s latest announcement.

National Insurance contributions are set to rise from next year, with workers paying more out of their pay packet to fund essential services in England.

Critics claim the move will see the lowest paid paying more, with some calling for a tax on wealth to be introduced instead.

Let’s go into more detail, then, about what’s been announced. You probably want to know: how much are National Insurance contributions going up by? Why, exactly, are they going up? And when are the contributions going up? Here are the details.

How much are National Insurance contributions rising by?

Boris Johnson has confirmed National Insurance contributions will rise by 1.25 percentage points.

The changes are expected to cost a UK worker on £20,000 about £130 a year, while someone earning £50,000 will see £505 a year deducted from their salary.

The increase is expected to raise about £12 billion. Employers will also make an added contribution.

Why are National Insurance contributions going up?

There are a couple of reasons National Insurance contributions are going up.

The Government has admitted breaking a manifesto promise, but says no-one could have foreseen the coronavirus pandemic. Therefore, this is one of the reasons.

The other reason is because of the need to deal with and fund both the NHS and social care in England, with both made worse by the Covid-19 situation.

Initially, the cash raised will go towards fixing the backlog within the NHS in England. Then, over time, the money will spread towards social care, also in England.

The issue of how best to fund the health service and social care has continued to rumble on through many different governments.

When are National Insurance contributions going up?

Don’t worry if you think the changes kick-in right away, as the National Insurance hike will be coming in from the next financial year, which begins in April 2022.

The plan is actually to introduce a new tax, a Health and Social Care Levy, which will appear on pay cheques from April 2023 and will show separately. In the meantime, the charges will appear as National Insurance contributions.

The rise in contributions will be a UK-wide increase, and the Prime Minister has promised the devolved administrations extra cash, so it’s not seen to be them boosting England’s health and social care systems.

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