Pensions - Articles - Buried in the Budget detail show gains halved by NI increase

 “In the Budget, the Chancellor announced an increase in the higher rate income tax threshold from £46,350 to £50,000 from next April, a year earlier than expected. This is good news for those earning above the current upper limit. An individual earning £50,000 or above will save £60.83 per month in income tax. However, what wasn’t highlighted in the Budget was that the upper limit for paying National Insurance at 12% also goes up to £50,000. As NI reduces to 2% above the limit, individuals will pay an extra 10% NI meaning someone earning £50,000 will lose £30.41 per month in extra NI payments. The net effect is the income tax saving is halved by the changes to NI.

 “Scottish residents face a worse situation. The Scottish Government sets its own threshold for higher rate tax, which is currently £43,000. We will need to wait until the Scottish Budget on 12 December to see if they will unfreeze this. But the changes to National Insurance apply across the UK. This means someone in Scotland earning £50k will pay an extra £30.41 in NI without saving anything in income tax.”