With the cost of living crisis worsening, the government is being encouraged to do a lot more to help people by delaying a planned rise in National Insurance.
The 1.25% increase to National Insurance is due to take effect from 6 April and is expected to raise £12bn a year for health and social care services, but it breaks prime minister Boris Johnson’s 2019 election manifesto commitment not to raise taxes.
From April, the average worker will pay an extra £255 a year in taxes.
Estate agents earning £20,000 a year will pay an extra £89 and higher earners on £50,000 per year would pay an extra £464.
The government is being accused by Blick Rothenberg of pushing ahead with April’s National Insurance (NIC) increase so that it can later cut income tax in a perceived tax giveaway in the run-up to the next general election.
Nimesh Shah, CEO at the tax and advisory firm, said: “The government has strongly resisted recent calls to cancel or postpone the NIC increase at the chancellor’s Spring Statement next week. “However, the cost-of-living crisis is here now and working families are fearing the higher tax burden in a month’s time. Despite that the government has reinforced its desire to push ahead with April’s 1.25% increase, under the backdrop of record inflation and soaring energy prices.”
He continued: “The government should be seriously considering at least a deferral of the 1.25% NIC increase to help working families in the wake of the impending cost of living crisis.
“An individual earning £30,000 will be £214 worse-off per annum from April; someone earning £50,000 will be over £500 worse-off. There is also the additional NIC burden for employers as businesses grapple with increasing operational costs.”
Shah added: “Widespread reports earlier in the year suggested the Chancellor, Rishi Sunak’s plans to cut the basic rate of income tax by 2p in 2024/25 – this is likely to be announced at the next Autumn Budget as the government makes it first moves towards the next general election.
“This is a tactical move by Rishi Sunak and the government to give something back in run-up to the next general election, which Boris Johnson took away, when he announced the Health and Social Care Levy last September. However, the reality now is quite stark, and the government should do what it can to limit the impact of higher living costs.”
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