National Insurance has been cut – but UK households will still be left millions worse off as a tax burden hits a record high. According to the Institute for Fiscal Studies, a full time minimum wage (£20,800 per year) worker will have £165 from a 2p cut to NI contributions from next year.
They will also be hit by £413 from frozen tax thresholds so overall £248 worse off. Full time average earnings (£35,000 per year) will have £449 from 2p cut to national insurance but be hit by £413 from frozen tax thresholds, so overall £36 better off. £60,000 per year earners will get £754 from 2p cut to national insurance.
But it will be hit by £1,386 from frozen tax thresholds so overall £632 worse off. Torsten Bell, Chief Executive at the Resolution Foundation, said: “The truth is taxes are up not down. These cuts are dwarfed by tax rises already underway.” The Institute for Public Policy Research said that for every £100 spent on the national insurance cut, £46 would go to the richest fifth of households with only £3 going to the poorest.
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Paul Johnson, Director of the IFS, said: “The public finances haven’t meaningfully improved… The cut to national insurance will put more money into workers’ pockets, but won’t be enough to prevent this from being the biggest tax-raising Parliament in modern times.”
Unison General Secretary Christina McAnea said: “The Government is on the ropes and wants to shift attention from its dire poll ratings. The Chancellor is simply giving back what he and his inept predecessors have already snatched from working people. No one will be fooled. They will still be worse off.”
On Wednesday, Mr Hunt’s first two personal NI tax cuts announced in the Autumn Statement were for the self-employed. He also extended a huge tax break for businesses, announced welfare reforms to get more people into jobs, and announced that the freeze on the Local Housing Allowance would be lifted.
