As widely reported, the UK government is expected to announce an increase in NICs in order to raise funds for social care and to help address backlogs in the NHS as the UK emerges from the covid-19 pandemic.
Blick Rothenberg suggests that a 1% increase could raise around £12.5bn in 2022/23 if it were to apply to both employee and employer class 1NICs together with self-employed contributions. The firm foresees any increase hitting low and middle earners hardest, but notes that the government may try to ‘sell’ the proposal as a relatively small cost now which saves potentially thousands of pounds in later life. An increase in NICs naturally affects people of working age, rather than those who have already retired.
Robert Pullan, partner at the firm commented: ‘Increasing NIC rates by 1% will cost £2 per week for someone earning £20,000 per year, or £17 per week for someone earning £100,000 per year. This is not insignificant and will make a real dent in average family incomes.’
Edward Troup, former executive chair and first permanent secretary of HMRC, tweeted: ‘If Sunak chooses a national insurance increase to pay for social care, it will not be for want of Treasury advice on the unfairness of a tax rise that excludes pensioners. What better opportunity to remove the age limit on NICs and apply it to all income?’
Indicative calculations produced by Blick Rothenberg suggest that over three years, the 1% increase would raise £16.45bn from primary class 1 contributions (if applied to both the main and additional rates) and an extra £20bn from secondary class 1 contributions.
As widely reported, the UK government is expected to announce an increase in NICs in order to raise funds for social care and to help address backlogs in the NHS as the UK emerges from the covid-19 pandemic.
Blick Rothenberg suggests that a 1% increase could raise around £12.5bn in 2022/23 if it were to apply to both employee and employer class 1NICs together with self-employed contributions. The firm foresees any increase hitting low and middle earners hardest, but notes that the government may try to ‘sell’ the proposal as a relatively small cost now which saves potentially thousands of pounds in later life. An increase in NICs naturally affects people of working age, rather than those who have already retired.
Robert Pullan, partner at the firm commented: ‘Increasing NIC rates by 1% will cost £2 per week for someone earning £20,000 per year, or £17 per week for someone earning £100,000 per year. This is not insignificant and will make a real dent in average family incomes.’
Edward Troup, former executive chair and first permanent secretary of HMRC, tweeted: ‘If Sunak chooses a national insurance increase to pay for social care, it will not be for want of Treasury advice on the unfairness of a tax rise that excludes pensioners. What better opportunity to remove the age limit on NICs and apply it to all income?’
Indicative calculations produced by Blick Rothenberg suggest that over three years, the 1% increase would raise £16.45bn from primary class 1 contributions (if applied to both the main and additional rates) and an extra £20bn from secondary class 1 contributions.
.tmb-editorspic.jpg?sfvrsn=df04ab27_1)
