A National Insurance tax cut could that could see people on average receiving £330 more annually will make no difference to those earning more than £37,000 after April’s tax hike.
From July the 6th, the National Insurance threshold will rise by almost £3000 to £12,569. But the 10% increase in April means as NI contributions rose from 12% to 13.25% of pay, the 1.25% extra will be more than the threshold change for earners of over £37,000.
People on Universal Credit will also suffer, as different taxation means that for every £1 earnt, only 45p will be kept. This means that of the £330 extra from the tax cut, people on benefits will only get to keep £148.50.
Those who will benefit the most from the tax cut will be earners of £12,569 per year – meaning they will no longer pay National Insurance. However, the cut is a welcome reduction as the cost-of-living crisis sees people picking food over petrol and searching for ways to reduce their energy costs in order to save money.
Speaking to Sky News about his stance on National Insurance, Health Secretary Sajid Javid said: ” “When we spend money on public services, whether it’s the NHS or anything else, the money can only come from two sources.
“You raise it directly from people today through taxes or you borrow it, and then essentially you are asking the next generation to pay for it. I think it is right that we pay for what we are going to use as a country, but we do it in a fair way. The way it is going to be raised is the top 15 per cent of earners will pay almost 50 per cent, and I think that is the right way to do this.”
The HM Treasury notes that the National Insurance threshold increase will benefit around 30 million people. They add that 2.2 million workers will no longer have to pay national insurance.
Article Source: Kent Live