What is the National Insurance increase?
The new rise in National Insurance contribution has been making headlines and this extra tax increase was one of a number proposed by the government in order to cover the increasing costs of the NHS and social care. The National Insurance contribution is a payment all workers make to cover the NHS, social care, the state pension and more. All employees who are over 18 and earning over £184 a week, or if they are self-employed and earning more than £6515, pay National Insurance and the payment stops when they retire. As of 6th April 2022, the annual National Insurance contribution will rise by 1.25% and this will affect millions of workers in the UK.
A rise in taxes in 2021
Announced on the 7th of September by the UK government, to opposition from all sides, this National Insurance increase goes against the Conservative manifesto pledge to not raise taxes, however, they claim it is a necessary measure. The increase will come into effect during the tax year starting in 2022 and was confirmed to parliament by Boris Johnson himself. The extra funding will be used to cover increasing stress on the NHS, social care for those who don't have assets of more than £20,000 and they also announced social care over a person's lifetime will be capped at £86,000.
How will the National Insurance increase affect me?
The increase will affect people differently and there is also a rise for those who are self-employed. If you are employed and earning between £9,568 and £50,270 a year you will have to pay 13.25% on earnings, and 3.25% on income over £50,270. There are certain deductions and exceptions and the increased contribution will be paid to the government by your employer before you are paid. If you are the director of a limited company and your own employee, your National Insurance contribution will also increase.
Get in touch
If you need a specialist accountant to help you navigate the national insurance increase, contact SRB Associates today. Our team of expert accountants based in Melton Mowbray are here to help, so call us today on 01664 503 681/682.