National Insurance calculator: What will I pay and how is tax changing?


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Social Security benefits were cut for millions of workers during the first week of January.

However, other changes mean the overall amount of taxes paid by taxpayers is at record levels.

How is National Insurance changing for employees?

As of January 6, 27 million employees pay 10% on income between £12,571 and £50,270 during the fiscal year, which runs from April 6 to April 5 of the following year. This replaces the previous National Insurance (NI) rate of 12%.

For someone with an average full-time salary of £35,000 the cut is worth around £450 a yearaccording to the think tank Institute for Fiscal Studies.

Enter your annual salary into the calculator below to determine how this change affects you.

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NI on income and profits above £50,270 will remain at 2%.

NI is not paid by people over state pension age, even if they are working.

Eligibility for certain benefits, including the state pension, depends on the amount of NI payments you have made.

NI rates apply throughout the UK.

How is National Insurance changing for the self-employed?

From April 6, 2024, two million self-employed will pay 8% on profits between £12,571 and £50,270down 9%.

From the same date, self-employed people will no longer pay a separate category of NI called Class 2 contributions.

The government says the two measures will amount to £350 a year for a self-employed worker earning £28,200.

What is happening to the National Insurance thresholds?

The income level at which you start paying NI (the threshold) has been frozen at £12,570 until 2028.

This means that as wages rise, more people will have to pay NI.

Why are millions of people paying more income taxes?

As wages rise, more people will also have to start paying income tax, and more will have to pay higher rates.

The tax-free personal allowance remains at £12,570. (Most taxpayers pay no tax on income below this level).

The point at which the higher tax rates come into force is also frozen at £50,271.

The freezes will create 3.2 million additional taxpayers by 2028, and 2.6 million more people will pay higher tax rates. This is according to the Office for Budget Responsibility (OBR), which independently assesses the government's economic plans.

He expects policy to raise £25.5bn more per year by 2027-28 than if the NI and income tax thresholds had increased in line with inflation.

According to economic think tank IFS, by 2027-28 an employee earning £35,000 “will overall pay around £440 more per year in direct taxes due to all the changes to income tax and NIC since 2021.”

What are the current income tax rates?

You pay income tax to the government on employment income and self-employment profits.

Income tax is also paid on some advantages and pensions, income from rental of real estate and income from savings And investments beyond certain limits.

These prices apply in England, Wales and Northern Ireland:

THE basic rate Income tax is 20% and is paid on income between £12,571 and £50,270 during the tax year.

THE higher rate Income tax is 40% and is paid on income between £50,271 and £125,140.

Once you earn more than £100,000 a year, you also start to lose your tax-free personal allowance. This means you have to pay income tax of 40% on part of the first £12,570 of your income.

You lose £1 of your personal allowance for every £2 your income exceeds £100,000. So if you earn more than £125,140 a year, you no longer get a tax-free personal allowance.

THE additional rate Income tax is 45% and is paid on all income above £125,140 per year.

How is taxation different in Scotland?

A little income tax prices are different in Scotland.

From April 2023 the prices are:

  • Tax-free personal allowance: £12,570 (reduced by £1 for every £2 earned above £100,000)
  • 19% startup rate: £12,571 to £14,732
  • Scottish basic rate of 20%: £14,733 to £25,688
  • Intermediate rate of 21%: £25,689 to £43,662
  • Higher rate of 42%: £43,663 to £125,140
  • Maximum rate of 47%: above £125,140

In December, the Scottish Government announced a new “advanced” rate of 45% for those earning between £75,000 and £125,140. The top tax rate will also increase to 48%.

From April 2024, the new prices will be:

  • Tax-free personal allowance: £12,570 (reduced by £1 for every £2 earned above £100,000)
  • 19% startup rate: £12,571 to £14,876
  • Scottish basic rate of 20%: £14,877 to £26,561
  • Intermediate rate of 21%: £26,562 to £43,662
  • Higher rate of 42%: £43,663 to £75,000
  • Advanced rate of 45%: £75,001 to £125,140
  • Maximum rate of 48%: above £125,140

The Scottish Government estimates that 114,000 people will pay the new advanced tax rate and a further 40,000 the top rate.

Who pays the most income tax?

For most families, income tax is the largest tax.

But for poorer households, a larger share of family income is spent on expenditure taxes (indirect taxes).

For the poorest fifth of households, VAT is the main tax paid.

What is the historical amount of taxes in the UK?

One way to measure the overall amount of taxes is to compare them to the size of the economy.

In the 2023 Autumn Statement, the OBR said they would increase “in each of the next five years to reach a post-war peak of 38% of GDP”.

How do UK taxes compare to other countries?

Looking at the amount of taxes collected as a proportion of the size of the economy in 2022 – the most recent year for which international comparisons can be made – the figure was 35.3%.

This puts the UK right in the middle of the G7 group of major economies.

France, Italy and Germany tax more, while Canada, Japan and the United States tax less.



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