High earners lose out in NI hike
Wealthy taxpayers face a national insurance hike without an equivalent rise in national insurance benefits, it has emerged
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
PricewaterhouseCoopers.
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.