Millions of workers across the UK will be paying more towards National Insurance, as the tax rates increase on April 6 2022.
National Insurance is a tax that counts towards your entitlement to state benefits and the state pension, paid on earnings above a threshold by employees, the self-employed and employers.
With the cost of living crisis already burdening Brits, the government's decision to raise National Insurance costs will see workers pay hundreds or thousands more in taxes every year.
Here's how much National Insurance is going up and how much extra people will have to pay due to the hike.
How much is National Insurance rising?
National Insurance Contributions (NICs) will go up by 1.25% from April 6 2022.
This means that millions of workers will now be contributing more to National Insurance (NI) amid soaring energy bills and inflation, which is currently at 6.2%.
The rise in NI will see those earning above £9,880 annually liable for 13.25% NI contributions, and for those earning above a higher threshold of £50,270, the rate will be 3.25%.
The government has said that the tax hike will help pay for £39 billion more on health and social care over the next three years.
How much more will you have to pay towards National Insurance?
The amount of National Insurance you pay depends on your salary, with those earning below £9,880 not liable to contribute towards National Insurance or the new levy.
Monthly NICs from April depending on salary are as follows:
- £20,000 - £122
- £30,000 - £222
- £40,000- £333
- £50,000 - £443
- £60,000 - £472
- £70,000 - £499
- £80,000 - £526
- £90,000 - £554
- £100,000 - £581
From July, however, the National Insurance threshold will increase from £9,880 to £12,570 and become the same as the income tax threshold, meaning that you won't pay National Insurance or income tax if you earn below £12,570 a year.
If you earn more than this, you will still benefit as you will pay less National Insurance overall because of a higher threshold.
At the moment, those receiving state pension don't make payments towards NI. However, this will change from April 2023, with employed pensioners also expected to start contributing towards the tax.
Who pays National Insurance?
National Insurance is paid by employees on their wages and self-employed on their profits. Employers also pay extra NICs for staff
From April 2023, National Insurance will return to its previous rate, with the extra tax collected as a new Health and Social Care Levy. This will also be paid by people over state pension age who continue to work.
