From the 6th of April, all employers, employees, and self-employed people working in the UK will pay 1.25% more on National Insurance for the upcoming year.

Instead of paying National Insurance contributions of 12% on earnings up to £50,270 and 2% above that amount, workers will now pay 13.25% and 3.25% respectively. When it comes to the self-employed, the corresponding rates will increase from 9% and 2% to 10.25% and 3.25%.

For people having an annual salary of £20,000, the contribution is £130, while people earning £30,000 will pay £255 and those earning £50,000 yearly are to pay £505.

As of early April, workers pay National Insurance on an annual wage above £9,880. From July this threshold will increase to £12,570.

The new tax hike is expected to bring in £ 39bn over the next three years. It aims at helping to reduce the NHS backlog caused among others by the epidemiological situation.

The additional financial resources are expected to reduce the waiting time for treatment and allow for numerous additional treatments, tests, and operations.

According to Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown, people earning less than £34,000 a year will pay lower social security contributions than a year before, while those with higher earnings will be requested a higher contribution. 

Image: Unsplash

Author: Sébastien Meuwissen