The government introduced legislation last week to ensure that when the upper
limit – above which high earners do not pay national insurance contributions –
goes up, they will not get equivalent pension benefits for the extra NICs they
pay. NICs have always theoretically been treated as not being a tax and as an
‘insurance scheme’ that qualifies payers for welfare benefits.
‘Doesn’t this show yet again that it’s a tax?’ said John Whiting of
The upper limit is being raised to be aligned with income tax. That means
taxpayers pay the 11% rate on more of their income. But they would normally
qualify for a state second pension for paying more, which will now not happen as
a result of the legislation.
‘It points out how stupid it is that it is not a tax and that it to go
through a separate bill,’ added Whiting.
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The firm says that the U-turn 'does not alter the need for a fundamental review of the way we tax work' and that the current tax system is in need of reform
Legislation on the NICs changes to be brought forward in the autumn following publication of 'the full effects of the changes to Class 2 and Class 4' in the summer
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