National Insurance: What are NI and income tax and what do I pay?
Buy Now An error occurred. Buy Now An error occurred. Book Novotel Hotel National Insurance: What are NI and income tax and what do I pay? Banzai Japan Music Video The government has announced an increase in the amount of National Insurance (NI) paid by employers. Before the Budget, the chancellor and prime minister had promised not to increase the main rates of income tax and National Insurance (NI) for working people and these will not change. NI rates paid by workers and the self-employed have already been been cut in 2024, but previous changes to the way tax is calculated mean the amount many people pay overall has risen. Budget 2024: Key points at-a-glance How the Budget will affect you and your money Book Novotel Hotel What is National Insurance and what does it pay for? The government uses National Insurance contributions (NICs) to pay for benefits and to help fund the NHS. It is paid by employees, employers and the self-employed across the UK. Those over the state pension age do not pay it, even if they are working. Eligibility for some benefits, including the state pension, depends on the NICs you make across your working life., external How does National Insurance work?, external Check your National Insurance record Banzai Japan Music Video How much do employers pay in National Insurance? At the moment businesses pay a rate of 13.8% on employees’ earnings above a threshold of £9,100 a year. In the Budget Chancellor Rachel Reeves said this rate would increase to 15% in April 2025, and the threshold would be reduced to £5,000. The employment allowance – which allows companies to reduce their NI liability – will increase from £5,000 to £10,500. In total Reeves said the changes would raise £25bn a year by the end of the period covered by the Budget. Neither employers nor employees pay NI on pension contributions. There had been widespread speculation that the Budget could set out plans for employers to start doing so, but it did not. Would raising employer National Insurance break Labour’s pledge? How much do employees pay in National Insurance? Workers start paying NI when they turn 16 and earn more than £242 a week, or have self-employed profits of more than £12,570 a year. The starting rate for National Insurance for 27 million employees fell twice in 2024: from 12% to 10%, and then again to 8%. The previous Conservative government said that the two cuts were worth about £900 a year for a worker earning £35,000. For the self-employed, Class 4 NI contributions on all earnings between £12,570 and £50,270 fell from 9% to 6%. At the time, the previous government said this was worth £350 to a self-employed person earning £28,200. Self-employed workers also no longer have to pay a separate category of NI called Class 2 contributions. The NI rate on income and profits above £50,270 remains at 2% for all workers. National Insurance rates, external What are the current income tax rates? Income tax is paid on earnings from employment and profits from self-employment during the tax year, which runs from 6 April to 5 April the following year. It is also paid on some benefits, external and pensions, income from renting out property, and returns from savings, external and investments, external above certain limits. The basic rate is 20% and is paid on annual earnings between £12,571 and £50,270. The higher rate is 40%, and is paid on earnings between £50,271 and £125,140. Once you earn more than £100,000, you also start losing the £12,570 tax-free personal allowance. You lose £1 of your personal allowance for every £2 that your income goes above £100,000. Anyone earning more than £125,140 a year no longer has any tax-free personal allowance. The additional rate of income tax of 45% is paid on all earnings above £125,140 a year. These rates apply in England, Wales and Northern Ireland. Some income tax rates are different, external in Scotland, where a new 45% band took effect in April 2024. At the same time the top rate also rose from 47% to 48%. What is happening to NI and income tax thresholds and why do they matter? Despite the NI cuts for workers and the self-employed in 2024, millions will still pay more tax overall because of changes to the tax thresholds. These are the income levels at which people start paying NI or income tax, or have to pay higher rates. These used to rise every year in line with inflation. However, the previous government froze the NI threshold and tax-free personal allowance at £12,570 until 2028. Higher-rate tax will continue to kick in for earnings above £50,270. Freezing the thresholds means that more people start paying tax and NI as their wages increase, and more people pay higher rates. According to the Institute for Fiscal Studies (IFS) think thank, the freeze cancels out the benefits of the NI cuts for some workers. In the 2024-25 tax year, it says an average earner will have a tax cut of about £340 – from the combined tax changes – and people earning between £26,000 and £60,000 will be better off. But by 2027, the average earner would be only £140 better off – and only people earning between £32,000 and £55,000 a year would still benefit. Before the Budget there had been speculation that the chancellor would extend the freeze until 2030 but she said she had decided not to do so. Who pays most in income tax? For most families, income tax is the single biggest tax they pay. But for less well-off households, a greater share of family income goes on taxes on spending, known as indirect taxes. For the poorest fifth of households, VAT is the biggest single tax paid. How do UK taxes compare with other countries like France and Germany? You can look at the amount of tax raised as a proportion of the size of the economy, or GDP. In 2022
Covid pandemic remembered: ‘Every day was scary’
Buy Now An error occurred. Buy Now An error occurred. Book Novotel Hotel Covid pandemic remembered: ‘Every day was scary’ Banzai Japan Music Video The last time I met Laura Blackmore, I could only see her eyes. The rest of her face was hidden behind a mask, her words muffled behind the steamed-up visor. It was five years ago, as the first wave of Covid hit St George’s Hospital in Tooting, south London. She’d just been redeployed to one of the new intensive care units set up to deal with the overwhelming demand. This time around I can see her face and hear her words much more clearly. There’s no mask, no visor – but there are some very tough memories of March 2020 and what followed. “Obviously, I was really scared because we’d had no training at the time, whereas usually there’s a whole programme before you join intensive care. It was really nerve-wracking” – she pauses as she reflects – “I’d never seen so many patient deaths before. I can remember most of the patients, I can remember their faces.” She pauses again. Book Novotel Hotel “I used to come into work one day and it would be one set of patients, then I’d come in the next day and it would be a completely different set of patients… and it wasn’t because they were getting better.” Banzai Japan Music Video Five years on, Laura, who is now 28 and a ward manager on the Rodney Smith Ward at St George’s, has had plenty of time to reflect on her Covid experiences. “So it was scary – every day was scary. I remember having the visor and mask on, and I could just hear my own breath. “It was like when you’re scuba diving and you can just hear your own breath over anything else and that’s what it was like every day when you’d gown up outside the bays.” Laura pauses again. ” But… I mean, yeah… it was… it was one of the hardest times of my life for sure.” The experiences in the first wave of Covid were bad enough but a second wave was to follow. “At the time I did have staff support through the hospital which did help – just someone to vent and cry to – I just remember crying in my first session the whole way through. I didn’t… I didn’t know how to express what I’d been through because it was so difficult.” Laura adds: “You know, everyone had a family member, a friend or someone in their personal life that was going through something to do with Covid. So it was hard to then come home and tell them about all the horrific things you’d been seeing at work.” She says she had a lot of support at home from her parents, and from her friends, but that her colleagues who experienced similar things are the ones who helped her through the most – then and now. Laura did have to take time off work to deal with what she’d been through, but has used her experiences to help staff in her new role as ward manager – telling them it’s “OK not to be OK”, encouraging them to talk, to share. It’s clear though, I say to her, that Covid has never really left her. “Yeah, 100%. I tried to watch a couple of programmes about Covid, and I just can’t watch them at all – it brings all the emotions back – things like the noises, the sounds. “I can’t go over to the wards I was on then. The smells over there and the wards bring everything back and I never thought it would have that effect. Yeah, I definitely still struggle with it and I think about that time all the time.” Dr Nirav Shah, who is now the hospital’s clinical director for adult critical care, was also at St George’s five years ago as the first wave struck. “We changed everything,” he says. The hospital went from about 60 intensive care beds to around 120 at the peak. At one stage there were about 700 patients in the hospital with Covid. “There was a lot more death,” he remembers. “It was also the manner of the deaths. If someone is going to die, we aim to give them a good death. We aim to give them time, we like to make sure family are with them and we can support the family through that period but that was just impossible, particularly in the first wave of Covid – it was so difficult.” But Covid brought lessons, such as new ways to care for patients. Hospitals learned how to work more closely together, to share the overwhelming workload. One example Nirav points to is the new ACCESS system – developed during the pandemic to move critically ill patients between hospitals. It has just completed its 3,000th patient journey in the past three years. When I ask respiratory consultant Dr Jane Evans for her memories, she pauses – like many of the staff BBC London spoke to – because there are mixed memories. Thoughts of the courage shown, the teamwork, the dedication, the exhaustion and the tears. “A lot of us felt lucky,” she says. “We were able to come to work, we were able to feel that we were doing something. But that didn’t detract from how difficult it was to see people get sick.” On one afternoon, she says nine of her patients died. “We saw our colleagues get sick, we saw our friends and family get sick. Some people lost friends and family through this time… and that was really tough. So I think it shows just how the NHS did pull together and did some really amazing things really quickly.” She adds: “There’s a hidden part to it as well – for example, there have been a few television programmes that have highlighted or dramatised the world of Covid, and