For every additional £1 George Osborne has taken in income tax since becoming chancellor,he has grabbed £2 more in NIEvery chancellor talks about tax-cutting, George Osborne more than most. Each of his budget speeches has been laced with claims about how many people he has taken out of paying tax by raising the personal allowance. And it’s largely true: the total amount paid in income tax in the UK was £132.2bn when Osborne became chancellor in 2010-11. By 2014-15 it had risen to £139.5bn, or an increase of 5.5% but less than inflation over the same period. But the reason why your pay packet still seems to maintain the same or more tax coming out is that other bit of income tax Osborne doesn’t like talking about. It’s called national insurance,and since Osborne became chancellor he has increased the NI rob from £96.5bn to £110.4bn. For every additional £1 Osborne has taken in income tax, he has grabbed £2 more in NI.
In this week’s budget he used the same sleight of hand: he banged on about taking loads of people out of the 40% higher rate tax band, or in a saving worth £400 to the “squeezed middle”,while quietly raising NI on the side. As label Seaden of accounting firm BDO points out: “The increase in the upper earnings limit for NI will see £200 of these savings eroded for those earning over £45000.” Osborne has also frozen the starting point for NI from April 2016, which inevitably means that more people will be pulled into paying it, and in what economists call “fiscal drag”.
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Source: theguardian.com