A National Insurance tax increase is hitting the UK, the Government has announced.
The UK Government confirmed today that National Insurance will be rising by 1.25% in an effort to help fund the NHS and social care after the coronavirus pandemic.
National Insurance is a tax that employed and self-employed people pay on their earnings that allows them to later qualify for the state pension.
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From April 2023, the levy will appear as a separate entry on individuals' pay slips. It is at this point that working adults above pension age will chip in.
The Government is also increasing the rate of dividend tax by 1.25 percentage points to ensure people who receive income from dividends make the same contribution.
Boris Johnson announced that the devolved nations will receive an additional £2.2 billion in additional health and social care spending from the levy.
How much national insurance will I pay?
The tax will be progressive, meaning those who earn more will pay more.
Here is how much the 1.25% increase will affect how much you pay:
- If you earn just under £10,000, you will be exempt from paying
- If you earn £10,000, the amount you pay will increase from £52 to £57: a £5 rise
- If you earn £20,000, the amount you pay will increase from £1,252 to £1,382: a £130 rise
- If you earn £30,000, the amount you pay will increase from £2,452 to £2,707: a £255 rise
- If you earn £40,000, the amount you pay will increase from £3,652 to £4,032: a £380 rise
- If you earn £50,000, the amount you pay will increase from £4,852 to £5,357: a £505 rise
The amount you pay depends on your gross income, before tax and pension deductions.
How will the NHS benefit?
The money is expected to fund an extra nine million checks, scans and operations, as well as help the NHS focus on innovation.
