National Insurance rise: What is the new rate and how will it affect me?

The prime minister is understood to be under pressure from his cabinet to delay the tax increase at a time when households are experiencing spiraling energy and food bills and council tax rises.

But on Monday Boris Johnson suggested that he will stick with the proposal to help fund the NHS.

When asked by journalists whether the rise would go ahead in the face of cost of living pressures, Mr Johnson said: “The NHS has done an amazing job but it has been under terrible strain.

“Listen to what I’m saying: We’ve got to put that money in. We’ve got to make that investment in our NHS.

“What I’m telling people is, if you want to fund our fantastic NHS, we have to pay for it – and this Government is determined to do so.”

Here’s how the tax rise will impact workers…

How much is tax increasing and who pays it?

Currently employees pay 12 per cent NI on earnings between £9,568 and £50,268. From April 6 this will increase by 1.25 per cent.

All working adults will pay the levy. It means an employee on a £20,000 a year will pay around an extra £130 a year in tax.

The levy will cost someone on a £30,000 salary about £255 more per year more

Someone on £40,000 will see their National Insurance contributions go up by around £380 a year – to £4,032.

A worker on £50,000 will shell out an extra £505 a year – up to almost £5,360 in tax.

Workers earning less than £9,880 a year will not have to pay the new levy.

Anything earned above £50,268 currently attracts a rate of just 2 per cent. From April this will increase to 3.5 per cent.

What is it paying for?

The £12 billion tax grab was originally intended to help fund health and social care.

But this year the money will go toward clearing the post-pandemic NHS backlog.

In April 2023, NI will return to its current rate, and the extra tax will be collected, and listed on payslips, as a new Health and Social Care tax.


Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.