finance
monthly
Personal Finance. Money. Investing.
Contribute
Newsletter
Corporate

According to the government, the tax increase of an extra 1.25p in the pound will help pay for £39 billion more spending on health and social care across the next three years. 

Plans to increase National Insurance contributions were announced by the government back in September. Amid the spiralling cost of living crisis, the move by the government has faced widespread criticism. 

Instead of paying National Insurance contributions of 12% on earning up to £50,270 and 2% on anything above that, employees will now pay 13.25% and 3.25% respectively. Meanwhile, those who are self-employed will see their rates go up from 9% and 2% to 10.25% and 3.25%. 

Frances O’Grady, the general secretary of the TUC, has urged the government to offer more support to UK households: With energy bills set to shoot up by £700, and by hundreds more in the autumn, many households face being pushed into the red [...] Ministers must do far more to help people get through this cost of living crisis.”

Boris Johnson has come under pressure from some Conservative MPs to scrap or at least delay the increase to regain public support as he awaits the findings of police inquiries into claims of Downing Street parties held when the country was supposed to be abiding by lockdown measures. 

Critics, including former minister David Davis, are also pressuring the Prime Minister to abandon the national insurance plans due to the immense financial pressures many households are already facing amid inflationary cost increases and the imminent increase in the energy price cap. 

However, on Friday, a spokesperson for the Prime Minister said, “The Prime Minister and Chancellor are fully committed to introducing the health and social care levy in April.

We’ve spoken before about why we are doing that – in order to give the NHS the funds it needs to tackle the backlog that has built up, as well as tackling the long-term issue of social care.”

National insurance contributions, paid by employers and employees in the UK, are scheduled to increase by 1.25 percentage points at the start of the new tax year in April. The tax increase is a manifesto-breaking move by the Conservative party, aimed at raising £12 billion to support NHS funding amid the pandemic. 

However, former minister David Davis, amongst others, has urged the government to abandon its plans because of the financial pressure households are already facing amid inflationary cost increases and the imminent increase in the energy price cap. 

Speaking on Monday on BBC Radio 4’s Today programme, Davis said, “It was a judgment made on, frankly, quite a lot of wrong data.” 

They didn’t know at the time that by April we would have the highest inflation rate in 30 years, they didn’t know that interest rates would be going up, council tax would be going up, the fuel price is about to jump by £700 a year for the average family. Therefore they didn’t know quite what pressure there would be on ordinary people.”

About Finance Monthly

Universal Media logo
Finance Monthly is a comprehensive website tailored for individuals seeking insights into the world of consumer finance and money management. It offers news, commentary, and in-depth analysis on topics crucial to personal financial management and decision-making. Whether you're interested in budgeting, investing, or understanding market trends, Finance Monthly provides valuable information to help you navigate the financial aspects of everyday life.
© 2024 Finance Monthly - All Rights Reserved.
News Illustration

Get our free monthly FM email

Subscribe to Finance Monthly and Get the Latest Finance News, Opinion and Insight Direct to you every month.
chevron-right-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram