RISHI Sunak today claimed he was saving workers £330 after raising the amount people start paying National Insurance.
But we reveal how much you’ll REALLY save – or lose – after also absorbing looming hikes to the tax due next month.
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Unveiling his Spring Statement, the Chancellor ignored a legion of calls to scrap the controversial 1.25 percentage point NICs rise.
Instead he announced that from July the payment threshold will be increased from £9,500 to £12,500.
It means hundreds of thousands of families will pay less – and some of the very lowest earners will dodge the charge altogether.
Mr Sunak hailed: “That’s a £6billion personal tax cut for 30 million people across the United Kingdom.
“A tax cut for employees worth over £330 a year. The largest increase in a basic rate threshold – ever. And the largest single personal tax cut in a decade.”
But the £330 does not take into actual the tax hike into account, meaning people’s net gain will be much less.
Calculations reveal somebody earning £10,000 will be £11 better off in total. While they will be £1 worse off because of the NICs hike, this is more than compensated by the raised thresholds, giving them £11 more.
Meanwhile a worker on 17, 289, the National Living Wage, will be a total £242 better off after gaining £332 from the increased threshold and losing £90 in tax.
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The more you earn, the less you gain from the National Insurance changes because the tax hike outweighs the raised threshold.
The £36,000 mark is the point where there is no net benefit whatsoever from the tweaks.
People paying the higher rate – more than £67,200 – lose out £382 from the NICS hike despite the cushioning from the raised threshold.
NO SCRAP
The Chancellor resisted calls from many Tory MPs and Labour to scrap the National Insurance rise altogether.
The 1.25 percentage point increase is expected to raise £36 billion over the next three years.
Ministers say the cash will initially go into clearing the huge NHS backlog caused by the Covid pandemic.
Once that is sorted, the money raised will be used to fix Britain’s broken social care system.
But the tax was dreamt up before the cost of living crisis, which has been exacerbated by the war in Ukraine.
Brits are facing rocketing food, energy, and petrol prices with inflation outstripping earnings.
Mr Sunak has increasingly insisted Britain must balance the books following the huge outlay on Covid mass testing and furlough.
But inflation has led to soaring tax revenues and is eating into government debt, leaving the Chancellor with room for manoeuvre.
New figures yesterday suggested the Exchequer will now have to borrow £30billion less than forecast this year.
