An HMRC tax tool launched to help workers understand the impact of their changing National Insurance contributions falsely appears the government is reducing their bills rather than increasing them, campaigners have said. From Wednesday, the threshold at which most people start paying National Insurance on their earnings rises from £9,880 to £12,570 a year – a change hailed as the prime minister’s biggest tax cut of a decade, despite increasing the tax rate earlier in 2022, meaning the vast majority of workers are still paying extra. The Government’s calculator says a worker on £50,000 will pay £4,958 in National Insurance in the year to July 5, up from £4,968 in the previous 12 months, a saving of £10. However, this hides the fact that Mr Johnson raised the National Insurance rate by 1.25 percentage points in April at the start of this tax year – meaning that in reality, almost all workers will be worse off from the overall effect of the changes. Critics said a fairer comparison would be between the current tax year and the previous one, so workers could see the combined effect of both rate and threshold changes. In the year from April 2022, an employee on £50,000 will pay £5,049 to National Insurance. In the previous 12 months they would have paid £4,852. This comparison shows that instead of cutting their taxes, the combined effect of the changes cost them £197. The figures are flattering at other salary levels as well. Someone earning £70,000 would think their National Insurance bill had risen by £178 based on the HMRC calculator, according to analysis by tax accountancy firm Blick Rothenberg. A tax year comparison would show them to be £447 worse off. Those on £30,000 are told by the calculator that they will save £197. However, it will be just £53 better off over the tax year.
