National Insurance: What is the state of Britain’s income tax after a year of political chaos

Like the UK’s Conservative government, national insurance the third major correction of the year is about to take place.

For back sleepers, it is tax full-time employees pay from their wages, the self-employed pay from their trading profits, and employers pay on top of wages.

Until April, National Insurance was set at 12 per cent on earnings between £9,568 and £52,270 a year and 2 per cent on earnings above £52,270.

A further 1.25 percentage points were then added and the trigger threshold increased from £9,568 to £9,880 under the then Chancellor Rishi Sunak to fund further healthcare support afterwards NHS and social care sectors have been put under extreme pressure from outside Corona virus infection covid-19 pandemic.

This meant National Insurance was up to 13.25 per cent for those earning between £9,880 and £52,270 a year, and 3.25 per cent for those north of that.

A second change was announced in July when Mr Sunak again raised the threshold at which employees start paying from £9,880 to £12,570, bringing it in line with income tax in the interest of helping low-income individuals and families income. cost of living crisis deterioration.

Then, after a long Tory leadership contest to choose Boris Johnsonsuccessor to Downing Street, the winner, Liz Trussappointed Kwasi Kwarteng as its chancellor, who duly announced that the 1.25 per cent rate rise would be scrapped from November as part of his ‘mini budget’ of 23 September.

Although the economic package turned out to be a monstrous disaster of historic proportions, the man Ms. Truss brought in to replace the sacked Mr. Quarteng shortly before her political demise Jeremy Hunthas maintained this particular policy despite ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​a remaining one for the other defects of the Truss-Kwarteng growth program.

Now that Mr. Sunak is 10th himself, you can imagine he’d be tempted to reinstate the promotion, since that was his policy in the first place.

However, his decision to stick with Mr Hunt as chancellor suggests he is inclined to support the latter’s view and does not want to mess with Britain’s financial stability further for fear of triggering a new panic in the markets.

All this means that someone earning £40,000 would pay £3,652 a year in National Insurance until April, after which their rate rises to £3,991, only to drop to £3,634 in July sterling and again to £3,292 in November. (taking into account the threshold change, which remains despite the cancellation of the 1.25 percent increase).

Staggering stuff that ultimately means someone in this group will pay £360 less in National Insurance in 2022/23 than in 2021/22, a small relief given the current difficulties.

The biggest beneficiaries will naturally earn more because they usually pay a higher rate of tax.

Full-time workers should start seeing the changes reflected in their November wages, although the Treasury has warned that the complexities of some pay systems mean this may not happen until December or January. affect you.

Meanwhile, the self-employed will pay a ‘blended’ National Insurance rate, subject to frequent changes this year, which HMRC will work out for you when your self-assessment forms are submitted.