How Wages Will Be Affected By The National Insurance Rise
Bojo’s been hard at work, activating controversial plans and making changes to the National Health insurance, that is. The news of the National Insurance rise has not been met with warm and fuzzy feelings. Instead, 25 million average Brits who will be affected are wondering how they’ll afford the hundreds of pounds more each year for their National Insurance.
On the 7th of September, Boris released his latest plan; to increase National Insurance by 1.25% by April 2022. It doesn’t sound like much, but when you do the calculations over an annual period, you start to realise what a hefty chunk of change it really is. The 1.25% hike will be in the form of a social care levy on your hard-earned income, and it will come with dividend rates that increase by the same value.
Why is There a National Insurance Rise Planned?
You may be wondering what the reason for the hike is. According to the powers that be, the increase in what you’re paying towards your National Insurance will be the driving force behind the funding cap on care costs. Anyone with assets of less than £20,000 won’t be required to pay, and other pensioners will only have to pay up to £86,000.
The Cost to You
To the average man on the street, earning around £25,000, that’s an additional cost of £193 per annum. Of course, if you earn even higher, say around £67,000, you can say goodbye to a further £715 of your hard-earned cash each year.
If you’ve been following the news on the plans for a National Insurance hike, you might have heard the fellows at Downing Street initially saying that the cost would be around £7.50 per week to the average Brit – but it seems that’s no longer the case.
Of course, the more you earn, the more you will pay, but still, the National Insurance rise will hit low earners worse than high earners. That’s because the payable amounts are calculated weekly and monthly. Seasonal workers or those out of contract hours will have to pay in, even if they don’t earn the annual threshold.
Let’s consider the figures…
If you earn more than £9,564 per year (£184 per week), you must pay for National Insurance. You pay 12% on all earnings above £9,564 up to a cap of £50,268. If you happen to earn more than that, you will pay the 12% along with a further 2% on any amount above £50,268.
The Tory Party Has Egg on its Face
The entire affair doesn’t bode well for the reputation of the Tory unit. In fact, it seems to be the very thing that’s breaking the promises once made in the Tory manifesto. If you’re up to date with the manifesto, you’ll know that the party made bold promises that they would not increase VAT, income tax, or National Insurance.
The former Prime Minister, John Major, did not bite his tongue, calling the plan “regressive,” while Lord Hammond (the former chancellor) told the media that it was the wrong thing to do. In his view, it’s a case of asking the poor to subsidise the rich.
Brits happily pay their National Insurance. After all, it pays for unemployment benefits, sick pay, and the State Pension. But what does it mean when there’s a hike and people are already struggling with debt and the financial fall out of the global Pandemic? 2011 was the last time the National Insurance experienced a hike.