Rishi Sunak grilled by Andrew Marr over National Insurance rise
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As of April 6, 2022, National Insurance contributions are set to rise by 1.25 percent as part of the Government’s plans to fund the NHS and social care. This hike on payments is supposed to be a temporary measure which will end on April 5, 2023. The 1.25 percent will then be separated into its own Health and Social Care levy. The amount someone pays in National Insurance contributions depends on their annual income and employment status.
This latest rise will affect those in Class 1 and Class 4 employment which includes those paid by employers and the self-employed, respectively.
Anyone who is over the state pension age of 66 will not see their National Insurance contributions affected by the pending increase.
Currently, if you are employed by someone and receive somewhere between £184 to £967 a week, the Class 1 National Insurance rate is 12 percent.
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Comparatively, an employed person who earns over £967 a week will pay a two percent Class 1 National Insurance rate.
National Insurance is paid with your tax with employers taking it from their employees wages. Payslips will show when contributions have been made.
Those who are self-employed pay their National Insurance through Self Assessment tax forms.
People under this employment status may be able to make voluntary contributions to their National Insurance in order to avoid having gaps on their record.
However, this will only be the case if they have profits of less than £6,515 a year from being self-employed.
Having gaps in your National Insurance record could affect your ability to access benefits and other social security services down the line.
Some seven in ten Britons are set to change their spending habits to mitigate the pending impact of the National Insurance hike, according to research carried out by Nerdwallet.
Around half of the respondents said they had already made this change, while the other half admitted they were waiting for the rise in National Insurance to come into fruition in 2022.
Connor Campbell, a spokesperson for Nerdwallet, elaborated on what the proposed increase to NI payments will mean for many households across the country.
Mr Campbell explained: “Deductions to the bottom line will always be unpleasant. But, before panicking, we recommend calculating the actual cost of the 1.25 percent hike on your net salary.
“Our research showed that four in ten respondents did not know how much they currently spend on National Insurance.
“However, if you calculate how much you pay, and deduct the increase from your current budget, you will have a better idea of how it will impact you directly.
“For example, at a salary of £30,000 a year, you will pay an extra £21.30 a month.”
He added: “It’s always good practice to review your outgoings and spending habits, especially when there are changes to your circumstances such as rate movements, new expenses, tax increases or an adjustment to your salary.
“In the case of the National Insurance hike, working out exactly how much extra you will pay a month will give you a better perspective on which financial habits, if any, need to be altered ahead of April 2022.”
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