TaxPersonal TaxHigh earners lose out in NI hike

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.

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