National Insurance costs up again!
It was bad news for all employers and employees today as the Chancellor pledged to increase National Insurance Contributions by a further 0.5 % from April 2011. This means that all employees earning over broadly £40,000 face an uncapped 2% NIC charge on all their earnings. Employers, who were already bracing themselves for the headline employer rate moving from 12.8% to 13.3% in 2011, will be disappointed by the further increase to 13.8%.
Matt Ellis, Employment Taxes Partner at Deloitte, said, "When the original 1%
uncapped liability for National Insurance was introduced we always speculated
that it would provide an easy platform for Government to raise revenue without
increasing the headline rate of income tax. And that's what we've seen today.
Undoubtedly, many employers will try to mitigate the impact of this rate
increase by using salary sacrifice arrangements, to ensure that the overall pay
and benefits package is more tax efficient."
