Two-month warning to Brits with National Insurance number as rates set to rise

From April, National Insurance rates are set to rise by an eye-watering 10% per month.

The increase means people will pay hundreds more every year on their NI.

Prime Minister Boris Johnson has been facing pressure to scrap or at least delay the increase of 1.25% points.

Mr Johnson, along with chancellor Rishi Sunak, made a commitment to go ahead with the tax rise to tackle the coronavirus backlog.

Writing in The Sunday Times, they insisted that it is right to follow through on the "progressive" policy.

The National Insurance tax is used to pay for the NHS, state benefits and the State Pension, reports Daily Record.

This increase means employees, employers and the self-employed will pay 1.25p more on the pound for NI contributions.

James Andrews, at money.co.uk, said: "It's no surprise that many think this means their payments are going up by only a fraction.

"However, that figure relates to the rate, and means that for most people contributions are actually increasing by more than 10%."

So how much will it really increase?

Salary and new National Insurance Contribution:

  • £20,000 – will pay an extra £130 a year (£10.80 per month)
  • £30,000 – will pay an extra £255 a year (£21.25 per month)
  • £50,000 – will pay an extra £505 a year (£45.80 per month)
  • £80,000 – will pay an extra £880 a year (£73.33 per month)
  • £100,000 – will pay an extra £1,130 a year (£94.16 per month)

Each of these increases equates to an increase of an around 10.4%.

From April 2023, National Insurance will return to its current rate and the extra tax would be collected as a new Levy.

The new Health and Social Care Levy will also be paid by people over State Pension age who continue to work.

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James said: "The increased rate is set to affect millions of workers, particularly those on lower wages.

"For those people, the rise comes at a bad time."

You can find out more about the changes to National Insurance on the GOV.UK website.

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