Treasury pushes online tool to flag National Insurance cut
he Treasury has launched an online tool to show how take home pay will be affected by the upcoming changes to the National Insurance threshold from July
The tax cut represents a £6bn cut to National Insurance effective from 6 July and is worth an average £175 a year to taxpayers and will go some way towards offsetting the 1.5% increase introduced through the social care levy, which came into effect on 6 April.
The online checker will use salary information for employees who are paid through PAYE system, giving personalised estimates of how much they could save because of the government’s changes. All you have to do is enter your current salary before tax and it calculates the estimated saving depending on earnings.
The cut, which will see the point at which people start paying National Insurance rise to £12,570, is worth up to £330 and seven in 10 workers will pay less National Insurance even after accounting for the health and social care levy, the Treasury said.
From July, employees who earn £36,600 or under will pay less National Insurance. For example, a taxpayer earning average salary of £31,285 will pay £185 less over the nine-month period.
Everyone who pays National Insurance will see a tax cut, and the tool will show that employee earning up to £51,000 will see this cut more than offset the impact of the health and social care levy. This means the majority of working people will see a boost to their take home pay.
The tool estimates how much National Insurance an employee paid from July 2021 to June 2022 at the old rate and compares it with how much they will pay from July 2022 and June 2023. However, it is not suitable for every situation and does not provide a calculation of an individual’s National Insurance contributions liabilities.
Chancellor Rishi Sunak said: ‘With our historic £6bn National Insurance tax cut just weeks away, this new tool will show hard-working Brits how much more of their pay will be going directly into their pocket.
‘This tax cut, combined with £400 off energy bills and direct payments of £1,200 to eight million families, will help shield people from rising prices.’
Alongside this tool, the government has also launched a new financial support and benefits checker tool. It enables people to answer 10 simple questions to find out what support they might be eligible for by cross-checking against 25 individual benefits and support offers. This should help people find out what support they may be eligible for that they may currently not be accessing and is part of the government’s drive to help people manage the increased cost of living.
This first version of the financial support and benefits checker tool includes a selection of benefits and other sources of financial support, such as childcare support, job seeker’s allowance, budgeting loans and housing benefit. However, it does not include information about pension credits which are underclaimed by an estimated 1.3m pensioners.
A wider range of options will be included in another version in the next few months.
- Published in National Insurance
National insurance hike will go ahead
Boris Johnson and Rushi Sunak have pledged to go ahead with the upcoming 1.25% rise in national insurance for employees and employers from April, saying it is a progressive tax
In an article in the Sunday Times, the PM and the Chancellor said that the tax rise is essential as it will provide critical funding to address the NHS backlog.
‘We must clear the Covid backlogs, with our plan for health and social care – and now is the time to stick to that plan. We must go ahead with the health and care levy. It is the right plan,’ they said.
‘It is progressive in the sense that the burden falls most on those who can most afford it. Every single penny of that £39bn will go on these crucial objectives – including 9m more checks, scans and operations, and 50,000 more nurses, as well as boosting social care.’
Johnson and Sunak both stressed that they were in favour of a low tax environment but the pandemic has resulted in a number of tax rises, including the freezing of thresholds for annual allowances until 2026, which will drag more taxpayers into the higher rate of tax.
When the national insurance rise was first announced last September, the majority of Conservative MPs voted for the measure, and did not express any reservations.
Now a number of senior MPs have come out strongly against the rise which will hit employees and employers from April. There is growing concern that the rise, coupled with soaring prices, the energy crisis and high inflation, will hit most households and could stall post-covid recovery.
Business groups including the CBI and Federation of Small Businesses are also concerned that the rises will have a negative impact on business growth.
Federation of Small Businesses chair Mike Cherry said: ‘Rises in employers’ National Insurance will mean some employers having to reduce roles or hours, or curtailing pay rises for many workers, as the Office for Budget Responsibility’s (OBR) analysis shows. This is unfair and the government should change course.’
A CBI spokesperson said: ‘If the government goes ahead as planned then it is incumbent on them to use the March Budget to bring forward more ambitious plans to raise the longer term growth potential of the economy.’
- Published in Uncategorized