How much has National Insurance gone up – and how much will I pay?

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  • National Insurance payments are set to rise from today (6 April 2022), which is the start of the new tax year.

    It’s a controversial decision and one that’s been heavily criticised. This is because the news comes at a time when households are feeling the financial squeeze after the energy price cap increase and rising prices for things like fuel and food.

    The National Insurance increase was first announced by the Prime Minister in September 2020. Chancellor Rishi Sunak supported the announcement, saying: “To fund this big increase in permanent NHS spending and social care, we’re making the tough but responsible choice to increase taxes.” But in his Spring Statement on 23 March, Chancellor Rishi Sunak announced a further change to National Insurance that means the planned increase will be effectively cancelled out for some people and less steep for others.

    How much has National Insurance gone up by?

    National Insurance has increased by 1.25 percentage points. Sarah Pennells, consumer finance specialist with life and pension provider Royal London explains the numbers. “From April, National Insurance is going up by 1.25 percentage points for employers, employees and those who are self-employed. So the standard rate for people who are employed will rise from 12% to 13.25%, while the upper rate will rise from 2% to 3.25%. For people who are self-employed, it will go up from 9% to 10.25%, and from 2% to 3.25%.”

    The April increase will apply to employers, employees, and the self-employed who surpass the minimum threshold.

    However, as announced in the Spring Statement, the threshold at which you start paying National Insurance will be increased by £3,000, to £12,570 from 6 July 2022. This means that you will pay less NI than you would have because less of your income is subject to the tax. 

    While this threshold change applies to workers on PAYE, those who are self-employed could also see a reduction in how much they pay in the light of the national insurance shake up

    By making this change to the threshold, almost 2.2 million people will be taken out of paying National Insurance Contributions (NICs) altogether.

    But from 6 July 2022, the minimum threshold will increase, meaning that you can earn more before having to pay NI.

    How much National Insurance will I pay now?

    Thanks to the announced change in threshold, the 1.25 percentage point rise will not be as steep as it would have been for those on higher salaries, while for those on lower salaries, they will not see an impact of the rise, and could even pay less than they do now.  MoneySavingExpert’s Martin Lewis tweeted that those earning less than £35,000 per year will see no rise in National Insurance contributions.

    Use the table below to see how your NI contributions will be affected.

    Salary NICs in 2021/22  NICs 2022/23 with 1.25 percentage point increase in effect 2022/23 NICs with increased threshold in effect
    £20,000 £1,251.84 £1,340.90 £1,073.12
    £30,000 £2,451.84 £2,665.90 £2,398.12
    £40,000 £3,651.84 £3,990.90 £3,723.12
    £50,000 £4,851.84 £5,315.90 £5,048.12
    £80,000 £5,478.84 £6,317.90 £6,049.92
    £100,000 £5,878.84 £6,967.90 £6,699.92
    £120,000 £6,278.84 £7,617.90 £7,349.92

    Source: Quilter (assumes primary threshold of £9,880 for April, May and June 2022 and £12,570 thereafter)

    Why is National Insurance going up?

    National Insurance is going up to fund the Government’s plans for more investment in the NHS. The investment will be aimed at easing the backlog caused by the pandemic. It will also go towards plugging the gap in funding for social care as the Government introduces a price cap of £86,000 on the amount people pay in care costs during their lifetime.

    While the bulk of the money raised during the next tax year is expected to go towards health and social care in England, according to a BBC report, there’s also expected to be an additional £2.2bn for services in Scotland, Wales, and Northern Ireland.

    NI is not the only nationwide thing increasing in 2022, with Royal Mail announcing that the cost of First and Second Class stamps will go up in April too.

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