Latest budget - NI

susan87

My partner is employed and earning 49,500 (based in Scotland, so only the national insurance and personal allowance affect us, not the upper band changes). I am confused when I run salary calculators for next year's budget, that his tax in terms if income tax goes down by around £20 a month (because of the increase in personal allowance) but that his NI contributions go UP compared to this year, meaning next year he is actually paying an extra couple of pounds a month in tax despite no change in salary. This doesn't make sense to me since everything I have read says that the thresholds for NI class 1 are going up as well, meaning everyone is paying less in NI.

What am I missing?

Thanks!

chrisbur

susan87 wrote: »

My partner is employed and earning 49,500 (based in Scotland, so only the national insurance and personal allowance affect us, not the upper band changes). I am confused when I run salary calculators for next year's budget, that his tax in terms if income tax goes down by around £20 a month (because of the increase in personal allowance) but that his NI contributions go UP compared to this year, meaning next year he is actually paying an extra couple of pounds a month in tax despite no change in salary. This doesn't make sense to me since everything I have read says that the thresholds for NI class 1 are going up as well, meaning everyone is paying less in NI.

What am I missing?

Thanks!

Yes threshold has gone up from 162 to 166 so saving you 12% of £4 or just under 50p. But the upper earnings level has also been increased. This is the point at which your NI reduces from 12% to 2%. This has gone up from 892 to 962. Rough figures 49500 is 952 a week so new NI will have £60 moving from 2% to 12% so an extra £6 giving an overall increase of about £5.5 a week.