WORKING families will have to pay hundreds of pounds more in National Insurance each year as Boris Johnson and Rishi Sunak insist hikes will go ahead.
The politicians confirmed that the controversial raise will happen from April despite widespread opposition from conservative MPs, charities and financial experts.
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The hike is billed as an increase of just 1.25%, but experts including Martin Lewis have warned that means taxpayer contributions will rise by more than 10%.
For someone earning just £20,000 – well below the national average salary – that translates to extra payments of £130.45 a year.
Someone earning £30,000 annually would pay £255.45 more, while on a salary of £40,000 would see payments rise by £380.45 annually.
Money Saving Expert’s Martin Lewis called on the Treasury to change its communications and let people know the true cost of the hike.
He tweeted: “Please could you change the gov.uk website which is giving MISLEADING information about the NI rise.
“It says it is a 1.25% rise. That is not correct for most it is a rise of just over 10%. The rate is rising by 1.25% points.”
The difference between rising by percentage points versus a percentage makes it seem like the hike will be less severe than it is.
Money.co.uk’s James Andrews said: “With NI increasing by 1.25% points in April, it’s no surprise that many UK workers think this means their payments are going up by only a fraction.
“However, that figure relates to the rate, and this means that for most people contributions are actually increasing by more than 10%.
“With the country in the midst of a cost of living crisis, the increased rate is set to affect millions of workers, particularly those on lower wages”
Many have criticised the rise, saying that it will stretch budgets even further in the middle of a cost of living crisis.
Money.co.uk research published last month showed that average personal debt in 2021 more than doubled in the space of just 12 months to a whopping £25,879 a person.
The extra charge kicks in at exactly the same time as the expected 50% rise in the energy price cap that will also add hundreds of pounds to family budgets.
There’s been huge resistance to the plans, with MPs including Jacob Rees-Mogg reportedly asking for a delay.
Ex-Cabinet ministers David Davis and Robert Jenrick, have also publicly urged the PM to U-turn.
But this morning, the Prime Minister doubled down on the hike.
Writing in the Sunday Times alongside chancellor Rishi Sunak, he said: “We must go ahead with the health and care levy. It is the right plan.”
The hike will impact anyone who earns more than £9,564 per year or £184 a week.
Self-employed people earning more than £6,515 also pay national insurance contributions.
In total, it’s expected to hit the finances of around 25million Brits, who will see basic NI contributions rise from 12% to 13.25%.
Anyone earning over £50,268 a year also currently pays a lower National Insurance amount on their salary over that threshold.
Currently, they pay 2% on that income, but this will also rise to 3.25%.
You can use our tax calculator, created with Blick Rothenberg to see exactly how much extra you’ll pay.
The new rates kick in from April this year, when the new tax year begins.
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