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To find out about your tax surcharge for the forthcoming years, keep reading!
After the autumn budget announcement on 27th October 2021, the rise in National Insurance is confirmed. The National Insurance will see a hike of 1.25% from April 2022 while the Income-tax rate remains frozen. Though a change was initially announced in September, still the taxpayers have experienced a little shock after the announcement.
After the autumn budget announcement on 27th October 2021, the rise in National Insurance is confirmed. The National Insurance will see a hike of 1.25% from April 2022 while the Income-tax rate remains frozen. Though a change was initially announced in September, still the taxpayers have experienced a little shock after the announcement.
Along with the steep rise in tax rates, the red Budget book revealed some National Insurance income thresholds are also rising in line with inflation. This indirectly means that you might be able to keep more money than you might have thought.
So, here’s some more detail on what is going to be your taxation frame for the year 2022-23 and the coming years.
While announcing the budget earlier this year in March, Rishi Sunak had stated that there would be no hike in the income tax rate till 2026. This statement was cleared in the Autumn Budget announcement, where the Chancellor confirmed this would be the case: all income tax rates and thresholds will remain the same as they were in 2021-22. This also includes the personal allowance sticking at 12,570 Euros.
This somewhere means that most tax bills won’t change much. However, many people’s tax bills are most likely to increase due to the constant freezing of the income tax rate. Even a small pay rise will push the workers towards higher income tax rates. This would ultimately cause them to pay more tax on a small portion of their income.
In September 2021, Prime minister Boris Johnson announced the increase in National Insurance by 1.25% from April 2022, intending to bring extra funding to the NHS in support of the social care crisis prevailing in the country. This statement was confirmed after the budgetary announcement on 27th October 2021. In line with the September 2021 CPI inflation and national insurance income thresholds, the lower earnings limits will increase by 3.1%. The frozen earnings setting upper thresholds is 50270 Euros. This permits you to keep more of your money before National Insurance contributions (NICs) kick in, offsetting some of the effects of the rate rises.
So, if someone earns 30000 Euros a year and is employed, they would pay 2,452 Euros for class 1 National Insurance in 2021-22. This will rise to 2,665.90 Euros in 2022-23. All self-employed workers earning profits of 20000 Euros will pay 1097 Euros in 2021-22 through a mix of class 2 and class 4 contributions. They will have to pay 1,201.10 Euros in 2022-23.