Govt urged to raise NI threshold to soften tax blow

The Centre for Policy Studies has called on the government to raise the employee threshold for paying National Insurance to mitigate the impact from the planned tax hike on the poorest households.

The think tank said raising the employee threshold to £11,284, instead of the planned £9,880, would shield those on average and lower incomes from the tax hike.

The CPS wants the 1.25 percentage point hike, due to come into effect with the new tax year, scrapped altogether but so far the government has refused to do so.

It said the proposed concession would sacrifice about a third of the Treasury’s expected receipts from the NI rise, with the remaining burden falling on business and higher earners.

Robert Colvile, director of the CPS, said: “As families face rising energy bills and soaring inflation, the government must ensure it is not actively making life harder for those on low and average incomes.

“By increasing the National Insurance threshold for workers, the government can alleviate some of the cost of living pressures and allow households a small degree of respite.”

Read more in FT Adviser here.

Date Added: Friday 6th May 2022