Government proposals to increase National Insurance will mean 1 million more people will struggle to meet the cost of living this spring. Nearly a third (30 percent) more British households will find it difficult to make ends meet amid the cost of living crisis, according to a leading think tank.
The cost of living crisis is hitting the lowest income households the hardest because they have the least left over from their income for food and fuel.
That’s according to the National Institute of Economic and Social Research (NIESR) which is calling on ministers to scrap the tax increase.
It said destitution could increase by 30 percent in the next financial year if the proposals get the green light.
An increase in National Insurance will add further pressure to households who are already finding it tough because of rising inflation and higher energy bills.
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UK households living in destitution rose from 0.7 percent of all households in 2019 to 1.5 percent in 2020 according to the Joseph Rowntree Foundation.
It describes destitution as going without essentials needed “to eat, stay warm and dry, and keep clean”.
Many other commentators have also urged the Government to postpone its plans.
Stuart Crook, Partner at accountancy firm Wellers, said Britons now spend more money on taxes, including National Insurance, than they do on their house.
He explained: “The reality is the UK’s tax burden is already at a post-war high, with the average British household set to pay more than £1million in tax over the course of their life.”
Currently, proposals mean that millions of Britons will see their National Insurance contributions rise by 1.25 percent from April.
Income Tax UK has found that lower and average earners will be squeezed the most and those earning around £30,000 will lose nine percent of their salary to National Insurance.
A spokesperson said: “This data gives us a compelling insight into the fact that lower and average earners will be significantly more squeezed by the National Insurance hike than those at the very top.”
How much more National Insurance will I pay?
Salary of £20,000 – workers will pay an additional £130.
Between £30,000 and £50,000 – National Insurance payments will increase by £255 and £505 annually, respectively.
£80,000 or more a year – Britons will have to find an extra £880 in National Insurance during 2022.
Over £100,000 – National Insurance contributions will soar by £1,130.
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