GMB: Susanna Reid says Boris has 'no plan' on social care
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Higher earners on £50,000 per year will pay an extra £505. Both employers and workers will be dealt a 1.25 percent rise in National Insurance (NI) from April 2022. This will then be replaced by a separate tax based on earned income from 2023, calculated in the same way as NI and appearing on payslips. All working adults, including those over the state pension age, will pay the levy. The rates of dividend tax will also increase by 1.25 percent to help fund the package.
Helen Morrissey, senior pension and retirement analyst at Hargreaves Lansdown, said 1.28 million people over state pension age are in work, and added: “This reflects increasing longevity and the fact that many people continue to work because they want to. It makes sense that this group contributes to this levy.”
Hargreaves estimates the introduction of the levy will cost someone on a £30,000 salary an extra £255.40 per year, meaning they end up paying just over £2,700. NI contributions from someone on £40,000 will go up by £380 a year – £4,032 in total.
A worker paid £50,000 will lose an extra £505 a year, ultimately paying £5,357. And those on £100,000 will give an extra £1,130 yearly, taking their total contribution to £7,010.
Boris Johnson has insisted that “those who earn more pay more”, saying the top earning 14 percent of Britons will pay around half the revenues.
But think-tank the Resolution Foundation noted that today’s typical 25-year-old will pay an extra £12,600 over their working life from the rise in employee NI alone, compared to nothing for a pensioner on pension income.
Chief executive Torsten Bell said: “The Chancellor is still asking younger workers to pay more while many rich pensioners, among the biggest winners from today’s announcement, will not have to pay a penny.”
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