National Insurance: Scots high earners to pay more than equals in England for Boris Johnson's tax hike

By Torcuil Crichton

Thousands of Scots high earners will end up paying more than their equals in England for Boris Johnson’s tax raid on National Insurance Contributions.

The tax hike, thought to be a 1.25 per cent increase on NICs, will raise around £10 billion, which will be spent on the NHS as it recovers from the Covid-19 pandemic as well as meet adult social care costs in England.

But high earning Scots in the upper tax band contribute more in NICs than those in other parts of the UK.

Under the separate Scottish tax bands those earning over £43,663 already pay more income tax at 41 per cent rate than high earners in England who enter a 40 per cent tax band on earnings over £50,270 a year.

As well as paying more tax under the different rate, Scottish high earners also continue paying NICs at 12p in the pound on their higher earnings up to the £50,270 mark where NICs fall back to 2p in the pound.

Because National Insurance is a tax reserved to Westminster and does not recognise the separate Scottish tax bands there is no adjustment for high rate taxpayers in Scotland to get the lower NIC rate until their earnings hit the £50,000 mark.

As a result those earning over £43,000-a-year will end up paying more in NICs than those in England because National Insurance rates set by the UK Government do not recognise the separate Scottish tax bands.

The complicating factor in the already controversial rise in National Insurance comes as Boris Johnson briefed his Cabinet on plans to reform health and care funding, which are expected to tear up Tory manifesto commitments.

Cabinet ministers returned to Downing Street for a face-to-face meeting for the first time in 2021, with many around the table concerned about breaking a general election promise not to raise National Insurance.

Johnson hopes to present the package to the Commons on Tuesday as an attempt to help the NHS clear backlogs, as well as resolve long-standing issues around care costs.

The PM faces a Tory backlash, opposition from Labour on the generational unfairness of younger, lower earners paying for elderly care and a claim from the SNP that the policy “shafts” Scottish taxpayers.

But Johnson is expected to ram the funding measure through the Commons this week before opponents gain any momentum to stop the plan.

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