National Insurance raid ‘axed on Thursday’ in tax boost for 30 million – ‘Kwarteng ready’ | Personal Finance | Finance


This will be a hugely welcome move as the decision to raise the NI by 1.25 percent from April has skyrocketed tax bills for more than 32 million workers. It raised the overall NI rate to a punitive 13.25 percent and came at the worst possible time. Now Kwarteng is ready to reverse the move.

Last week the government confirmed it would hold a “tax event” to address the cost of living crisis.

Hard-working Brits are expected to celebrate a raft of tax cuts after Kwarteng presented its emergency budget on Thursday.

With the Commons back on hiatus on September 22, this is new Prime Minister Lis Truss’s chance to make her mark on the economy.

It strives to lower the tax burden to encourage investment, boost spending and boost economic growth.

Their argument is that stimulating growth will eliminate the deficit faster than raising taxes.

Truss has repeatedly pledged to cut taxes during the Conservative Party leadership race, including the controversial 1.25 percent NI hike in April this year.

Also Read :  Comcast to Raise Speeds for 20 million Xfinity Internet Customers

The so-called health and welfare levy was announced by former Prime Minister Boris Johnson and his Chancellor Rishi Sunak.

It was set to raise £12billion a year to clear post-Covid NHS backlogs and fund social care.

Still, it has put even more pressure on cash-strapped Britons, who are already reeling as energy and food prices soar.

Employers also have to pay it, making hiring more expensive and generating profits.

Hargreaves Lansdown Senior Personal Finance Analyst Sarah Coles originally calculated that the NI increase would cost a £30,000 earner an extra £333 a year to £2,786.

READ MORE: Liz Truss’ plans to cut Social Security could affect state pension

Sunak acknowledged his massive unpopularity by watering down the proposal. He raised the threshold at which workers start paying NI by aligning it with the personal allowance of £12,570.

Getting rid of the levy would still be a very popular move, and Coles said, “That was something Liz Truss promised repeatedly during the leadership contest, so it’s a key priority.”

Also Read :  Why I'm Not Counting on Social Security, and Neither Should You

Political analysts expect Kwarteng to smash the hated NI hike within days, the only question is when the change will actually go into effect.

Some reports suggest it will be scrapped in time for the November pay packages to put money in people’s pockets in the run up to Christmas. It will also help them deal with higher energy bills in winter.

Others have suggested he could wait until next year. said Tim Walford-Fitzgerald, partner at accounting firm HW Fisher. “I would expect Kwarteng to let the levy expire naturally on April 5, 2023, rather than reverse it in the middle of the tax year.”

However, any delay could prove unpopular as Britons are in dire need of help now as the cost-of-living crisis rages on.

DO NOT MISS:
Octopus hands over lifeline to customers with a cut in basic fee [LATEST]
British Gas, E.ON and ScottishPower customers warn of new scams [WARNING]
Households can save £336 on their energy bills [INSIGHT]

Also Read :  Manage your money to achieve goals; not sacrifice them- The New Indian Express

Myron Jobson, senior personal finance analyst at Interactive Investor, said the case for tax cuts is strong. “They could encourage higher consumer spending and encourage more investment in UK businesses.”

Abolishing the 1.25 percent NI hike “would put taxpayers’ money back in consumers’ pockets,” he added.

Truss opposed the NI hike in a cabinet meeting last year, putting her in direct conflict with Sunak.

The move became an issue in the Conservative party leadership’s campaign and caused controversy behind the scenes.

Laura Suter, Head of Personal Finance at AJ Bell, said: “Cuting NI was high on Liz Truss’ agenda during her campaign and we’re all excited to see how she’s going about it.”

We’ll find out on Thursday.





Source link