Poorest will earn just 63p a month from reversal of National Insurance hike, study warns

Britain's poorest households won't win just 63p a month from reversing the National Insurance hike, new research has found - while people earning over £100,000 will benefit the most.
Mini Budget Friday is set to fulfill Liz Truss' campaign pledge to scrap Boris Johnson's tax hike - designed to save the crisis-hit NHS and adult social care - also raising fears of future budget cuts.

But analysis by the respected Institute for Fiscal Studies (IFS) underscored how massively the move will be a boost for the wealthiest Britons.
The tenth of s wealthiest households, earning an average of £108,000, will save £1,800 on their annual tax bill, the equivalent of £150 a month, according to the think tank.
In contrast, the poorest 10%, three million people who earn an average of £12,000, will save just £7.66 - just 63p a month or 14p a week .
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Households with an average UK income of £31,400 will save around £20 a month, while those whose income is £55,000 will save around £58 per month, almost three times that amount.
"Reversing the recent rise in NICs [National Insurance Contributions] would tend to benefit households more the wealthiest than to the households s poorer, even as a share of their income," said Tom Waters, senior research economist at IFS.
Tony Wilson, director of the Institute for Employment Studies, told the The Times that the plans were a “tax giveaway to relatively high incomes” and risked fueling inflation.
“Concern among officials at the Bank of England and the Treasury is going to be that the decision is more inflationary than a subsidy or a more targeted tax cut,” he said.
The 1.25% increase in National Insurance was only implemented in April when it was designated as a health and social care tax, but Ms Truss says removing it can help the UK continue to grow.
This is part of the more than £30billion measures that will benefit the wealthy, including the scrapping of the planned 19p rise in corporation tax for a next year at 25p.
Kwasi Kwarteng, the new chancellor, is also expected to remove the 2014 cap on bankers' bonuses, although public sector workers are urged to exercise wage moderation to rein in the inflation.
It could also accelerate Rishi Sunak's plan to cut the basic rate of income tax by 1 pence, which is due to come into force in 2024, in time for the generator expected. al election that year.
The Chancellor should also create 12 special investment zones which could reduce employers' national insurance contributions for staff employed in the zones.
RecommendedThe spending spree has triggered warnings that the Bank of England will raise interest rates further – to curb inflation – and may demand the n...

Politics Sep 19, 2022 0 67 Add to Reading List

Poorest will earn just 63p a month from reversal of National Insurance hike, study warns

Britain's poorest households won't win just 63p a month from reversing the National Insurance hike, new research has found - while people earning over £100,000 will benefit the most.

Mini Budget Friday is set to fulfill Liz Truss' campaign pledge to scrap Boris Johnson's tax hike - designed to save the crisis-hit NHS and adult social care - also raising fears of future budget cuts.

But analysis by the respected Institute for Fiscal Studies (IFS) underscored how massively the move will be a boost for the wealthiest Britons.

The tenth of s wealthiest households, earning an average of £108,000, will save £1,800 on their annual tax bill, the equivalent of £150 a month, according to the think tank.

In contrast, the poorest 10%, three million people who earn an average of £12,000, will save just £7.66 - just 63p a month or 14p a week .

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Boris Johnson's own moral failings have diminished all around him

Households with an average UK income of £31,400 will save around £20 a month, while those whose income is £55,000 will save around £58 per month, almost three times that amount.

"Reversing the recent rise in NICs [National Insurance Contributions] would tend to benefit households more the wealthiest than to the households s poorer, even as a share of their income," said Tom Waters, senior research economist at IFS.

Tony Wilson, director of the Institute for Employment Studies, told the The Times that the plans were a “tax giveaway to relatively high incomes” and risked fueling inflation.

“Concern among officials at the Bank of England and the Treasury is going to be that the decision is more inflationary than a subsidy or a more targeted tax cut,” he said.

The 1.25% increase in National Insurance was only implemented in April when it was designated as a health and social care tax, but Ms Truss says removing it can help the UK continue to grow.

This is part of the more than £30billion measures that will benefit the wealthy, including the scrapping of the planned 19p rise in corporation tax for a next year at 25p.

Kwasi Kwarteng, the new chancellor, is also expected to remove the 2014 cap on bankers' bonuses, although public sector workers are urged to exercise wage moderation to rein in the inflation.

It could also accelerate Rishi Sunak's plan to cut the basic rate of income tax by 1 pence, which is due to come into force in 2024, in time for the generator expected. al election that year.

The Chancellor should also create 12 special investment zones which could reduce employers' national insurance contributions for staff employed in the zones.

RecommendedThe spending spree has triggered warnings that the Bank of England will raise interest rates further – to curb inflation – and may demand the n...