Spring Statement: Sunak increases NI threshold by £3,000
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In the Chancellor’s Spring Statement made in the House of Commons earlier today, Mr Sunak imposed the National Insurance rise in order to pay for rising costs within the NHS following the impact of the Covid pandemic. The tax will be raised by 1.25 percent and will see people who earn over £35,000 a year paying more into the Treasury coffers.
However, the move has been savaged by veteran journalist Andrew Neil, who mocked the long-term benefits of Mr Sunak’s plans.
He wrote on Twitter: “So let me get this right … Chancellor increases national insurance from next month by 1.25 percent.
“Has same impact as income tax rise of 1.25 percent for most workers.
“Then says he’ll cut income tax by 1 percent in 2024 … don’t quite see the point.”
Others also took to examining the impact of the rise in National Insurance.
Financial expert Martin Lewis also said: “The cost of living crisis is still going to be a substantial net loss in people’s real income over the next year and what has happened today will not cover that for people on lower or higher incomes but it will mitigate some of the impacts.
“There will still be many people who will be struggling and having to choose between freezing and starving but there will be fewer.
“And there will clearly be people who are going to have to curtail their lifestyles due to the cost of living… and some of them won’t have to curtail it quite as much.”
This was echoed by the leader of the TUC Frances O’Grady, who said: “The small print shows pay packets are now expected to fall in value by £11 a week this year.”
Economist Paul Johnson, director of the Institute for Fiscal Studies think tank, said he was worried the increases across the board will push more people into poverty.
He said: “The thing that was completely missing from this was anything for people on universal credit or state pension.
“That’s only going up by 3.1 percent next month when inflation will probably be around eight percent – so that’s going to be a big cut in living standards for those on the very lowest incomes.
“The rest of what he’s done, if you put together what he did in February with what he announced today, it really is quite a big package, but unfortunately for him and for our living standards, undone by the fact we’ve got this big National insurance rise coming in as well.
“So you put all of that together and there’s still going to be a lot of households that are significantly worse off over the next year.”
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Warning of more people falling into poverty prior to the announcement, one charity issued a grave warning to the Chancellor.
The Joseph Rowntree Foundation said: “400,000 people will fall into poverty if benefits are only uprated by 3.1 per cent this year.
“Inflation is currently 5.4 per cent, but is expected to rise further throughout the year.”
Katie Schmuecker, Deputy Director of Policy & Partnerships at JRF, said: “It defies logic to expect people to be able to cope with a steep increase in the cost of essentials when their incomes are not keeping up with inflation.
“We already hear countless examples of people across the country struggling to adequately heat their homes and feed and care for their families.
“Following a decade of cuts and freezes to the benefits system, this failure to keep pace with prices will cast more people into desperate situations.
“In a country as rich as ours in 2022, this is just not right.”
What do you think of the Chancellors Spring Statement? Are you worried about your financial situation following the announcement? Are you happy to pay more to fund the NHS? Let us know what you think of these questions, or add points of your own by CLICKING HERE and joining the debate in our comments section below – Every Voice Matters!
In spite of the rises in National Insurances contributions, some cuts were also announced by Mr Sunak.
These included a 5p cut in fuel duty on the forecourts around Britain, Income Tax being cut down to 19p from 20p in 2024, and zero percent VAT on energy-saving initiatives such as solar panels.
Some of the cuts however will not apply to Northern Ireland who remain bound to EU legislation under the Northern Ireland Protocol following Brexit.
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