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NI contributions to increase
By Johanna Gornitzki
National Insurance contributions will rise by 0.5% from 2011, the Chancellor Alistair Darling announced today.
The move will affect both employers and employees who earn more than £20,000 a year. In his pre-Budget report, Darling said: "I propose, therefore, from April 2011 to increase by half a percent all rates of National Insurance contributions, for both employees and employers.
"But to ensure this increase does not fall on those on modest incomes, I have also decided, at the same time, to raise the starting point for national insurance to align it with that of income tax.
"No one under £20,000 will pay any more national insurance contributions as a result."
Darling also announced that those with incomes over £150,000 will have to pay a new rate of income tax of 45% from April 2011.
Matthew Hunnybun, partner at PriceWaterhouseCoopers, says: "We don't really know how many eople this will affect yet but it will definitely cost both employers and employees more."
Stephen Robertson, director general of the British Retail Consortium, says: "In 2011, the chancellor believes we will just be emerging from recession. This seems an extraordinary time to be increasing this tax on jobs."
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