What will the Effects of the National Insurance rise mean for you?

8 01 2010

On Wednesday 9th December 2009, Alistair Darling delivered his Pre-Budget report. In it, he mentioned a 0.5% rise in National Insurance.

Currently, National Insurance is currently charged at 11% for those earning between £110 and £844 a week, and anyone earning over £844 a week, has to pay an additional 1% National Insurance on the earnings over £844. For example, if someone earns £1000 a week, the National Insurance would be worked out like this;

£1000 – £844 = £156

£844 X 11% = £92.84

£156 X 1% = £1.56

Total = £95.40

The reason I am writing this blog post is that I wanted to explain to you some of the effects that raising National Insurance will incur. Imagine we are now in April 2011, and National Insurance has just risen by 0.5%. It may not sound like a lot, but using the same example as above, look at this;

£1000 – £844 = £156

£844 X 11.5% = £97.06

£156 X 1% = £1.56

Total = £98.62

So, for someone earning £1000 per week, they will have to pay an extra £3.22 a week. It still doesn’t sound like a lot, but if you imagine everyone in the UK, not just those earning £1000, but people earning less and more, then that is a lot of money.

Another way the rise in National Insurance will affect us all is through the NHS. The Conservatives have claimed that by raising National Insurance by 0.5%, the NHS’s National Insurance bill would be £446m! The conservatives claimed that this bill for the NHS will result in a major cut in health spending.

The final effect I’m going to talk about today is the effect it could have on unemployment. According to research by the Federation of Small Businesses, 1/3 small businesses said that they were considering laying off employees due to the rise in NI.

Small businesses employ around 50% of the UK workforce, and if 1/3 businesses are considering laying people off, this puts around 16% of the entire UK workforce at danger of losing their job.

So, by increasing National Insurance, is it possible that the Government could make less money from NI contributions? What do you think?

If you would like help or guidance with National Insurance, why not check out the Best Accountants in Sussex?Tax Accountant




One response

31 01 2010
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In General I don’t place on blogs, only I would like to state that this place truly pushed me to make so! very good post.

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