National Insurance and income tax raid to DESTROY incomes - check how much you will pay

Rishi Sunak grilled by Andrew Marr over National Insurance rise

Daily Express See more videos

SHARE

SHARE

TWEET

SHARE

EMAIL

What to watch next

• 

  Rip Off Britain: British gas customer gets billed over £15K

  
  Daily Express
• 

  Cost of living: Struggling 73-year old woman talks to Kay Burley

  
  Daily Express
• 

  Money Box explains rules for working from home tax relief

  
  Daily Express
• 

  For Love or Money: Woman in tears after being scammed

  
  Daily Express
• 

  For Love or Money: Woman gets scammed out of £40,000

  
  Daily Express
• 

  Inflation 'swindles almost everybody' says Warren Buffett

  
  Daily Express
• 

  Undercover Boss USA: Employee offered $10k for college

  
  Daily Express
• 

  Rip Off Britain: Woman's Instagram is hijacked as part of scam

  
  Daily Express
• 

  For Love or Money: Victim uses house sale cash to pay scammer

  
  Daily Express
• 

  WASPI woman says ‘I've paid in' as she slams pension amount

  
  Daily Express
• 

  Sipello: Bartenders make cocktails with flavoured liqueur

  
  Daily Express
• 

  Secret Spenders: Couple find out how much they can save

  
  Daily Express
• 

  For Love or Money: Victim describes his experience as 'hurtful'

  
  Daily Express
• 

  Lorraine: Expert urges you to check statements to save cash

  
  Daily Express
• 

  For Love or Money: Man is scammed out of more than £10,000

  
  Daily Express
• 

  Martin Lewis advises on savings accounts and premium bonds

  
  Daily Express

Click to expand

Replay Video

• Rip Off Britain: British gas customer gets billed over £15K Rip Off Britain: British gas customer gets billed over £15K. Daily Express
• Cost of living: Struggling 73-year old woman talks to Kay Burley Cost of living: Struggling 73-year old woman talks to Kay Burley about looking after husband with Parkinson's and mentally ill son. Daily Express
• Money Box explains rules for working from home tax relief Money Box explains to changes to the rules of claiming tax relief if you work from home. Daily Express

UP NEXT

This is a double blow for up to 30 million Britons who will pay the new 1.25 percent National Insurance health and social care levy on their earnings from April 6 next year. On the same day, income tax thresholds will be frozen which will hit workers as incomes rise.

How much you pay will depend on your earnings but one thing is certain. It is going to hurt almost everybody.

Hiking National Insurance and freezing income tax threshold at the same time as inflation streaks towards five percent will add insult to injury, said Becky O'Connor, head of pensions and savings at Interactive Investor.

Workers who currently pay National Insurance (NI) will pay the new 1.25 percent health and social care levy from April.

This will hit employees, the self-employed and even pensioners. They were previously exempt from paying NI after State Pension age but soon it will be charged on any earnings they make from employment.

So what will it cost you?

© Getty Tax return

An employee earning the average salary of £30,000 currently pays £2,460 a year in National Insurance contributions.

A lower paid worker on £20,000 pays £1,252 a year in NI, while a higher earner on £50,000 pays £4,852, according to figures from Interactive Investor.

From April, the £30,000 earner will see their NI bill jump to £2,827. That's a thumping £367 more - which works out at just over £30 a month extra in NI alone.

Remember, they will pay more income tax on top of this, too.

The £20,000 earner will pay £210 extra NI, while the £50,000 earner will pay a thumping £581 more.

Almost everyone will end up poorer as a result, and at the worst possible time with prices going through the roof.

READ MORE: £10,900 a year is not enough - here's what pensioners really need

Yet that's only the start. O'Connor said while the NI increase will be painful, Sunak's decision in his March Budget to freeze income tax thresholds at today's level until the 2025/26 tax year will be "insidious".

She said: "By freezing thresholds while wages rise, people will be dragged into higher income tax brackets and pay significantly more as a result."

An employee on the average £30,000 salary currently pays £3,486 a year in income tax (remember, that's on top of £2,460 of NI).

From April, they will pay an extra £180, assuming they get a pay rise of 3 percent next year. Those who receive bigger pay rises will pay even more.

The £20,000 earner will pay £120 more in extra income tax, while the £50,000 earner will pay £546 extra.

This process will continue every year for at least the next five years, steadily eroding incomes.

DON'T MISS:

Millions get less than £100 a week in State Pension - claim now [WARNING]

Rishi Sunak's 55% 'nightmare' pensions tax trap - who pays, who won't [GUIDE]

'Inflation will eat your wealth' - how to protect your savings [ANALYSIS]

© Getty Rishi thumb

Once you add the new NI and income tax charges together, Sunak's tax attack gets really punitive.

The average £30,000 earner will pay an extra £547 to HM Revenue & Customs next year in total, as a result of these two tax hikes.

The £20,000 earner will pay £330 more in total, while the £50,000 earner will pay an extra £1,127 to HMRC. That's a staggering £94 a month extra.

Pensioners who continue to work in retirement will also pay NI for the first time, via the 1.25 percent health and social care levy.

They get a temporary reprieve, though, as the levy will not come into force until April 6, 2023.

This will be a permanent charge but many fear that instead of staying at 1.25%, it will steadily rise over time as the Treasury demands more revenues.

The Institute for Fiscal Studies predicts the levy may hit 3.15 percent to cover rising health and social care costs.

Things are going to get worse, not better.