Mr Sunak is set to outline the Government’s spending plans for the near future as part of the Budget, having already introduced massive changes to National Insurance in the spring. Earlier this year, Mr Sunak confirmed a 1.25 percent hike on National Insurance payments for workers, employers and the self-employed. However, some experts believe further changes could be introduced when it comes to tax bands and how much everyday workers will have to pay when the tax hike is implemented.
“We are unlikely to see further rises in Income Tax or National Insurance, given the recent 1.25 percent in the latter, although there may be some adjustments to bandings and personal allowances.
“Whilst this may reduce personal disposable incomes and thereby cut household savings, with interest rate rises on the horizon there are likely to be offsetting incentives to set money aside.”
Under the Government’s current proposals, someone earning £20,000 per year will end up paying an additional £130.
DON’T MISS
Furthermore, a worker earning at least £30,000 per year will pay an extra £255, while those getting £50,000 annually will pay an additional £505.
Those who are self-employed will see National Insurance rise to 10.25 percent on profits between £9,569 and £50,270. This will jump from two percent to 3.25 percent on any profits over £50,270.
National Insurance is payable on all dividend earnings which are above £2,000 a year and need to be paid to access certain benefits, as well as the state pension.
Changes to National Insurance are set to come into effect as of April 2022, ahead of the Government’s new Health & Social Care levy which will be introduced in April 2023.
After this date, this additional levy will become a separate tax on earned income with the Government having promised to return National Insurance rates to their current level.
Appearing on The Andrew Marr Show over the weekend, Mr Sunak defended the Government’s decision to raise National Insurance, which has been primarily criticised as being a tax on working people.
The Chancellor said: “Believe me, I wish I didn’t have to raise taxes. There’s no easy or good way to do it. You’re choosing between degrees of unpalatable options.
“Income Tax versus National Insurance: a reasonable question to ask. If you use Income Tax rather than National Insurance, there’s a couple of big differences.
“The first is that Income Tax doesn’t involve businesses. Therefore, the rate you would have to levy on people would be higher.
“Instead of 1.25 percent, the rate would have been over two percent. You’ve talked about the impact on families so instead of a typical basic rate taxpayer, earning £24,000 and paying about £180, they would end up paying closer to £350.
“The burden on them would be significantly higher if you were using Income Tax, so we should bear that in mind.”
Mr Sunak is set to outline the Government’s spending plans later this afternoon as part of his Budget announcement at 12:30pm.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
