A Conservative majority Government will cut taxes for millions of working people on low and middle incomes, the Prime Minister has announced.
National Insurance contributions (NICs) are paid as a percentage of a worker’s earnings, like income tax. For most employees, it currently applies at a rate of 12% on earnings above £8,632. Under the Conservatives:
- The threshold at which NICs are paid will rise from £8,632 to £9,500 next year (2020-21).
- This will cut taxes for 31 million workers by approximately £100 a year.
- Over time we will raise the threshold to £12,500, saving workers approximately £500 a year.
This follows Conservative action to cut taxes for people on low and middle incomes by increasing the Income Tax Personal Allowance. Since 2010, the Conservatives have doubled the personal allowance to £12,500, so that a typical basic rate taxpayer now pays £1,205 a year less tax.
Prime Minister Boris Johnson, said:
“I want people on low- and middle-incomes to keep more of their hard-earned money
“The Conservatives have already cut income tax for over 30 million working people. Now a Conservative majority government will go further by cutting National Insurance too.
“It’s only because we will get Brexit done and end the uncertainty that we can afford to cut taxes for hard-working taxpayers.
“By contrast Labour would create further uncertainty with two chaotic referendums while increasing taxes on every taxpayer by £2,400 a year.”
- We will raise the National Insurance threshold to £9,500 next year. We will lift hundreds of thousands of people out of paying tax completely by raising the national insurance threshold from £8,632 this year to £9,500 next year. That will be a tax cut for 31 million of approximately £100 per worker.
- Self Employed workers will benefit from this rise too. This rise will apply to self-employed workers as well by increasing the Lower Profits Limit, which is when they start paying Class 4 NICs on profits from £8,632 to £9,500 too.
- Our ultimate ambition is to raise the national insurance threshold to £12,500. We are determined to go further in cutting taxes for hardworking families. At the 2018 Budget, we met our previous commitment to increase the Personal Allowance to £12,500 one year earlier than planned. We intend to build on this track-record by increasing the point at which you start paying NICs. The initial increase to £9,500 is our downpayment on our ultimate ambition to reach £12,500 – this would put almost £500 in people’s pockets.
- We have already raised the Income Tax Personal Allowance to £12,500. Since we came to office in 2010, we have doubled the personal allowance on income tax which is now £12,500. A typical basic rate taxpayer now pays £1,205 less tax than in 2010.
- Labour’s day-to-day black hole means that each individual taxpayer in the UK could see their income tax rise by £2,400 a year – meaning workers would lose a month’s wages in higher taxes to pay for Corbyn’s reckless spending plans. Corbyn’s Labour would open up a huge black hole in the nation’s finances and hard-working people will be the ones that suffer. In order to pay for his policies, he will not only have to massively increase borrowing and debt, he will also need to hike up taxes by £2,400 per person – this is equivalent to an entire month’s pay for the average earner (The Sun, 11 November 2019, link).