Workers across Oxfordshire will have to fork out up to hundreds of pounds extra each year in National Insurance payments, after a controversial 1.25% tax hike was confirmed yesterday.
The Government announced the tax hike to help fund social care following the Covid-19 pandemic, even though it breaches the 2019 Conservative party manifesto.
The Conservative Party had pledged it would not increase the rate of income tax, VAT or NI.
The new rates will come into force from April 2022 and the Government hopes it will raise about £12bn a year so social care.
Who will have to pay?
If the plan is approved by MPs today, employees, the self-employed, and employers in Oxfordshire, as well as the rest of the country, would have to pay the increased tax of 1.25 per cent on NI contributions.
The rise would also include people in work who are over the state pension age, who do not currently pay NI.
The government said that those earning less than a threshold of £9,568, around 6.2 million people, will not pay the levy.
How much will I have to pay?
You pay mandatory NI if you are 16 or over and are either:
- an employee earning above £184 a week
- self-employed and making a profit of £6,515 or more a year
For those earning £10,000 they will have the smallest NI increase, just £5 from £52 currently to £57 from April Next year.
Those who earn £30,000 pay £2,452 in NI contributions at the moment with this set to rise to £2,707 from April, an increase of £255.
At the top end of the scale, people who earn £100,000 current pay £5,879 in NI contributions and this looks to rise by £1,130 to £7,009 from next year.
What does this mean in real terms?
The average salary in Oxford is currently estimated to be around £33,200.
If we take the £30,000 base salary as a close estimate to the average salary in Oxford, then workers look set to pay around £255 extra in NI contributions.
This £255 could be equivalent to:
- Around three and half weeks’ worth of food shopping based on the weekly average for the south east at £68.70, or
- Two months’ worth of rent for a garage in Oxford listed on Zoopla, or
- Seven and half months’ worth of water bills, based on the UK monthly average of £33.05, or
- Three months’ worth of electric bills, based on the UK monthly average of £66 per month, or
Nine months’ worth of broadband bills, based on the UK monthly average of £27.39, or
- Five and half months’ worth of mobile phone bills, based on the UK monthly average of £45.60, or
- Eighteen months’ worth of a Premium Netflix plan at £13.99 a month, or
- 11 and half weeks’ worth of bus travel using a Oxfordshire Gold 7 Day MegaRider ticket from Stagecoach, or
- Seven weeks’ worth of ‘7 day anytime’ London travelcards covering Zones 1-2, or
- Five months’ worth of train tickets between Oxford and Oxford Parkway