NATIONAL Insurance rates will rise in April and will mean millions of people paying more tax.
The rise was first announced last year and is designed to help cover the costs of social care.
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But the increase comes at the same time that living costs are rocketing, including food and energy bills.
The tax rise will go ahead though, Downing Street has confirmed, despite fears that it could squeeze already hard-up households further.
National Insurance rates are different depending on how much you earn.
You pay National Insurance when you’re employed and earning more than £9,568 a year, or £184 per week.
Self-employed people earning more than £6,515 also pay national insurance contributions.
The hike will hit the finances of around 25million Brits, who will have to pay 1.25 percentage points extra.
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This means rates will rise from 12% on earnings between £184 to £967 a week to 13.5%.
The rate on earnings over this amount will also rise from 2% to 3.25%.
As the rates are a percentage of your earnings the exact amount more you’ll pay in cash terms will depend on your circumstances.
Currently, someone earning £15,000 a year pays contributions of £652, while another person earning an annual salary of £25,000 is taxed £1,852 each year.
On earnings of £15,000 the increase will mean paying an extra £68 a year, and for £25,000 and additional £193.
You can use The Sun’s tax calculator, created with tax advisors Blick Rothenberg, to help you work out how much tax you’ll be paying and what your take-home pay will be.
You can find The Sun’s tax calculator here.
You’ll be asked to fill in some personal details like your age and if your married or have kids.
Fill in your annual salary and any other income you have, for example from a pension or investments, and you can get started understanding the difference you’ll pay in tax this year and next.
Don’t forget that the tax year runs mid-year and the new one starts in April 2022.
The government previously announced that there will be no income tax rise next year and the current rates will be frozen until 2026.
It’s worth noting that the information entered into the Blick Rothenberg tax calculator may be used to produce aggregated trend analysis but will not be used to identify individuals or their personal circumstances.
The calculator is designed only to give you an indication of how the changes could impact your situation.
Boris Johnson confirms the NI tax hike will go ahead saying ‘every penny’ will help to fund the ‘Covid backlog’
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This post first appeared on thesun.co.uk
