Anger over national insurance reprieve

Anger over national insurance reprieve 2
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Anger over national insurance reprieve as it will not kick in for months… while rise in payment starts TODAY

  • Rishi Sunak announced last month he would raise threshold at which people start paying NI contribitions by £3,000
  • But he said this would not come into force for three months
  • However millions are seeing tax bills rise from today because of 1.25 percentage point rise in NI rates
  • The rise in NI rates is for workers and businesses despite the cost of living crisis 
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Workers will pay more national insurance from today amid anger that a reprieve for lower earners will not come into force until July.

Chancellor Rishi Sunak announced last month that he would raise the threshold at which people start paying NI contributions by £3,000 – but not for three months.

Yet millions will see their tax bills soar from today because of the 1.25 percentage point rise in NI rates for workers and businesses. 

The Daily Mail has led a clamour of calls for the Government to spike the hike as soon as possible to avoid worsening the cost of living crisis.

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Chancellor Rishi Sunak announced last month that he would raise the threshold at which people start paying NI contributions by £3,000 – but not for three months

Chancellor Rishi Sunak announced last month that he would raise the threshold at which people start paying NI contributions by £3,000 – but not for three months

But the Treasury said raising the threshold to £12,570 will give 30million workers a tax cut, which one source said meant ‘we have spiked the hike for most people’.

Ministers insist the tax rise, named the Health and Social Care Levy, is needed to help tackle Covid backlogs and reform the adult social care system – raising £39billion over the next three years.

On the eve of its introduction, Boris Johnson insisted: ‘The levy is the necessary, fair and responsible next step, providing our health and care system with the long-term funding it needs as we recover from the pandemic.’

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The Chancellor confirmed he was pushing ahead with the tax rise in last month’s Spring Statement.

Yet the Government is facing fresh pressure to scrap the hike as new figures suggest the Chancellor will rake in an extra £38.6billion in VAT over the next four years.

Families will pay an estimated £430 more in VAT next year compared to last as skyrocketing inflation pushes up prices in shops, according to analysis by the Liberal Democrats.

On the eve of its introduction, Boris Johnson insisted: 'The levy is the necessary, fair and responsible next step, providing our health and care system with the long-term funding it needs as we recover from the pandemic'

On the eve of its introduction, Boris Johnson insisted: ‘The levy is the necessary, fair and responsible next step, providing our health and care system with the long-term funding it needs as we recover from the pandemic’

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The party is urging Mr Sunak to slash the top rate of VAT from 20 per cent to 17.5 per cent for one year.

Lib Dem leader Sir Ed Davey said: ‘Families are facing soaring energy bills and desperately need a tax cut to help them make ends meet. But instead of helping, the Conservatives are breaking their promises by raising taxes again and again.’

Separate analysis by the party, shared with the Mail, shows the hospitality sector is facing a £360million tax bombshell as a result of the NI hike.

Pub, restaurant and hotel owners are set to pay more than £215million this year to due to the hike, while hospitality workers will face an extra tax bill of nearly £145million.

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Lib Dem leader Sir Ed Davey said: ‘Families are facing soaring energy bills and desperately need a tax cut to help them make ends meet. But instead of helping, the Conservatives are breaking their promises by raising taxes again and again'

Lib Dem leader Sir Ed Davey said: ‘Families are facing soaring energy bills and desperately need a tax cut to help them make ends meet. But instead of helping, the Conservatives are breaking their promises by raising taxes again and again’

Sir Ed warned: ‘This unfair tax hike could sound the death knell for our treasured pubs and restaurants.’

The British Chambers of Commerce (BCC), which represents businesses across the country, is also urging Mr Sunak to scrap the NI hike as soon as possible.

The organisation’s director general, Shevaun Haviland, said she was ‘disappointed’ that the Chancellor had chosen to ignore bosses’ objections to the tax grab.

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She said: ‘Last summer businesses were already saying there was an increase in raw materials prices and shipping costs, and recruitment was very hard. Into December, energy prices started to tick up – and that was before the war in Ukraine pushed them off the scale.

‘And now they’ve got the NI hike. This is not business as usual – it’s very serious. We just wanted the hike to be delayed for a year until businesses could get back on their feet.’

The organisation's director general, Shevaun Haviland (pictured), said she was 'disappointed' that the Chancellor had chosen to ignore bosses' objections to the tax grab

The organisation’s director general, Shevaun Haviland (pictured), said she was ‘disappointed’ that the Chancellor had chosen to ignore bosses’ objections to the tax grab

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