New NI tax. How are people meant to afford this?

[OnTheBrink1]

We bought our house just before covid, got a mortgage that pushed us quite a bit but worked it all out and it’s been doable since then. We needed to push the mortgage quite a bit because we were upsizing to get an extra bedroom for the kids and a downstairs loo and in our area and from what we had before it was a jump.
Been managing since then but no progression opportunities in DH job during the last 18 months due to covid it seems as recruitment was largely paused.
However, now we will now have to pay an extra almost £900 per year on this new tax. £73 I make it.
We don’t have any benefits of any kind.
It’s going to be quite a struggle to afford the mortgage and still maintain the car (which is old but we need for work and kids stuff) plus all the usual bills and food. Kids are between 8-12 and need bus passes, constant uniform and all manner of expenses of course.
I mean we will struggle by but it’s going to be tough to afford that extra £73 a month when we had all the mortgage planned.
Just don’t get how they can bring it in so soon when it’s such an increase. How are others in a more difficult position going to afford this? People will be loosing their houses surely?

Comparing salaries without knowing housing costs is a fruitless exercise. It’s comparing apples and pears.

If I lived where my colleagues live, I would live like a king. They earn the same and housing costs are easily 25% of what I pay. All other bills are cheaper too (water, etc). They frequently talk about days out/ holidays/ restaurant trips that I can’t afford. They could have the same lifestyle I do, on half my salary.

Whereas I live in an area with high housing costs which stretches far geographically - so no option for me to move as I don’t want to be far from my friends and family.

Thanks for your comments. I know I am not by any means the worst off, of course there are so many more people in worse positions, but this is true for all of us, in all aspects of life.
In answer to a few- yes we do earn a above average - around the 70k mark (not 100k as some have suggested) It’s not fallen into our lap by any means, we have had times of not being able to afford to eat properly earlier in our lives and getting a job that pays well has been 20 years plus of slog in terms of passing exams and 12 hour working days, stress and illness due to stress.
We got out mortgage on a fixed deal and budgeted for the repayments. It was a new mortgage before covid. I think most people try to get the most they can afford if upsizing? It’s hard at first but as the years roll on, salary goes up and mortgage payments stay generally the same (if on a fixed) so it’s becomes easier and easier to afford.
However obviously couldn’t have prepared for a pandemic and my DH (main earner) and the entire staff of his workplace had his salary slashed by 15% for 8 months in 2020. That took up quite a bit of savings and safety net.
For those who say ‘op you are on 70k sorry that’s a huge amount why can’t you afford an extra £70-£80 per month.
Well, it’s all relative. DH works in a city. The commute alone is over 4K per year. But the salary is twice what he would earn locally doing the same job.
We live in a fairly expensive area in the South - this is partly due to family connections but mainly due to transport links for work. We are stuck here for now because of the kids schools. We had saved and waited ages- years and years to move to where we are now and moving again would be very costly not to mention the housing market is barren round here at the moment anyway. Houses are really expensive ( rental or to buy) so lots of money goes on that. We are not frivolous, we have an old 18 year old car, haven’t spent any money on the house and everything in here is from the previous occupants, we don’t eat out or go on fancy holidays. Pretty much all of that money goes on things the kids need for school, food and bills. We are most certainly not rolling around in cash wondering what next treat to spend it on as some people seem to think.
What I’m saying is yes we will find it from somewhere but it just seems like an awful lot per month all at once and so soon. Even if I was in a position to no longer be able to afford my mortgage payments, 6 months isn’t really enough time to sell and buy somewhere cheaper - it took us over a year last time!
By no means do I want any sympathy. My OP was also asking how others in different circumstances will afford to keep their houses, it’s just seems like such a lot at once

Tax is far too high, full stop, on everyone and neither main political party is low tax now, sadly.So voters don't get an effective choice. The only hope is if enough Tory voters make enough complaints to their MPs etc that the low tax wing of the Tory party might ultimately prevail. I won't hold my breath.

As a high earner I want to pay more tax to help others. If I felt for a second that it wouldn’t be swallowed up by red tape and middle management in the NHS which desperately needs a complete overhaul then I’d be all for it. I’m also sad that it hits the working but not the affluent pensioners, doesn’t touch the asset rich and allows families to pass vast wealth.

I’m a high earner in Scotland. £130,000 a year. Massively lucky- I had working class parents, started my professional career with substantial debt.

No parental help for house buying so big mortgage buying for first time in 2015. We will inherit nothing.

I pay private healthcare for whole family.
Provide financial support for parents who are still working low paid jobs in 60s
Pay £46,933 pa income tax
Pay £6465 NI

• £1,625 new NI

I know high earners are meant to take it all on the chin and accept it without complaining because there’s always someone worse off but not all of us top 1% are tories awaiting land and a country pile. For some of us it’s still quite hard to handover another £1600 a year to see it disappear into a mismanaged abyss.

Overnight we appear to have turned into a one party nation.

I don't any of us should feel comfortable with the dire state of politics in this country and what this means for our future. The very fact Boris had no qualms in overturning his manifesto, his own party policies and shove most of his future voters under a bus is quite alarming to say the least, and he expects to get away with it I assume after all where is the opposition - totally vacant.

The only thing this policy has done is bring the country together to unite against it.

OnTheBrink1
However obviously couldn’t have prepared for a pandemic and my DH (main earner) and the entire staff of his workplace had his salary slashed by 15% for 8 months in 2020.That took up quite a bit of savings and safety net ...
Well, it’s all relative. DH works in a city. The commute alone is over 4K per year.

Was he able to work from home during the pandemic and save money on his commute?

I think I commented months ago that I knew this Pandemic would need to be paid for. We are in for hard times and my advice is , if you can, save your money, do without as many luxuries that you can. I know for young families it's very difficult. My own family will be hit quite hard. If I had one piece of advice to give, don't mortgage yourself up to the wire. We are not even at normal interest rates, if these start to rise you will be in difficulty. I experienced this way back in the 80s, as a young mum with a family. It was hell and we knew people who were repossessed etc. It's the main reason I believe everyone should have a savings buffer and Ive never been a mad spender. Buy what you need. Martin Lewis website has really good advice for anyone struggling financially. I very much feel for the younger generation and the low paid, the Pandemic was nobody's fault. As an older person I would also like to say I don't and will never,ever vote Conservative. This has really shown that all they care about is lining their old school tie pals pockets. For ordinary working people, they care not a jot. For any of you struggling please do visit Citizen's Advice, sometimes your library will know locally where you can go for help.

@forinborin

I feel for you, OP. Similar drop here, but a single parent. I cannot quite understand the gloating about rich fat cats like us having to pay for this. I won't benefit from the improvement in public services, not being entitled to public funds, and I have two of my own parents to fully fund in another country where there's zero social support. On a budget like everyone else.

Of course I won't starve, but that's my usual charity money gone, genuinely hope it makes everyone happier.

I completely sympathise with sending money to your parents.

A lot people can't fathom that when you're a higher earner, it doesn't mean the money is all for you. Some of us already live quite frugally, because we're financially supporting relatives who wouldn't be able to stand on their own two feet without us.

Like you, I'm also going have to cut back on giving to charity. It's that, or cut back on money to my family, and I can't do that. I'm all they have.

@Nanananani

As a high earner I want to pay more tax to help others. If I felt for a second that it wouldn’t be swallowed up by red tape and middle management in the NHS which desperately needs a complete overhaul then I’d be all for it. I’m also sad that it hits the working but not the affluent pensioners, doesn’t touch the asset rich and allows families to pass vast wealth.

I’m a high earner in Scotland. £130,000 a year. Massively lucky- I had working class parents, started my professional career with substantial debt.

No parental help for house buying so big mortgage buying for first time in 2015. We will inherit nothing.

I pay private healthcare for whole family.
Provide financial support for parents who are still working low paid jobs in 60s
Pay £46,933 pa income tax
Pay £6465 NI

• £1,625 new NI

I know high earners are meant to take it all on the chin and accept it without complaining because there’s always someone worse off but not all of us top 1% are tories awaiting land and a country pile. For some of us it’s still quite hard to handover another £1600 a year to see it disappear into a mismanaged abyss.

I don't earn as much as you, but I can relate to all of your points.

No help for buying my (tiny) home, no expectation of inheritance, propping up family financially, and willing to support the NHS if there was any chances my taxes would actually reach the NHS.

I think it's quite something that the gut reaction to the news is 'if the money would actually be used properly, it wouldn't hurt as much'.

We clearly all don't trust our politicians. What a vote of confidence...

@Clavinova

OnTheBrink1 However obviously couldn’t have prepared for a pandemic and my DH (main earner) and the entire staff of his workplace had his salary slashed by 15% for 8 months in 2020.That took up quite a bit of savings and safety net ... Well, it’s all relative. DH works in a city. The commute alone is over 4K per year.

Was he able to work from home during the pandemic and save money on his commute?

For some of it yes, but the trouble is it hasnt really saved much money because he still has to go in for park of the week - it’s no longer better to buy a season ticket but going in for 2 or 3 days per week actually costs so much more. Also the station car park is very dear and hasnt brought back weekly or monthly parking tickets yet - it’s just day to day which is £9 per day on top. There is talk of 3 day per week season tickets but nothing has materialised yet

Well, I will make sure fellow voters and myself will give a drubbing to the local Tory MP in our marginal constituency. Sadly, Labour to do well. Still more taxes.

A rise in NI is the main starter in an expensive meal out. The main meal will be paying for the cost of pandemic. Pudding will be paying for housing and maintaining refugees fleeing their home countries - with more knock on impacts to state services.

Typos listed in upper case:

Well, I will make sure fellow voters and myself will give a drubbing to the local Tory MP in our marginal constituency - AT THE NEXT ELECTION. Sadly, Labour WILL do well. Still more taxes.

A rise in NI is the main starter in an expensive meal out. The main meal will be paying for the cost of pandemic. Pudding will be paying for housing and maintaining refugees fleeing their home countries - with more knock on impacts to state services.

Much depends on what our taxes pay for. For many of us now, we don't expect the Government to spend it wisely on our behalf - it will be money for chums and for vanity projects.

@portico

Of course I looked at my post before posting it.

Then surely you must have seen what a supremely ridiculous and pathetic suggestion it was, saying people should pay back their furlough money.

When people are whingeing about the 1.25% rise in N.I. how the fuck do you think people are going to pay back so much furlough money (running into 20 grand or more,) when they had a 20% drop in income for about a year.

Although, from the stupidity of your suggestion, you probably think people on furlough got the furlough money, in addition to their wages!!! Probably think they're rolling around in a bed of 50 fifty pound notes...

Just when I think this site can't get more batshit.

@portico

Of course I looked at my post before posting it.

Then surely you must have seen what a supremely ridiculous and pathetic suggestion it was, saying people should pay back their furlough money.

When people are whingeing about the 1.25% rise in N.I. how the fuck do you think people are going to pay back so much furlough money (running into 20 grand or more,) when they had a 20% drop in income for about a year.

Although, from the stupidity of your suggestion, you probably think people on furlough got the furlough money, in addition to their wages!!! Probably think they're rolling around in a bed of 50 pound notes...

Just when I think this site can't get more batshit.

kite22: Once you earn more than £4189 per month your NI drops from 12% to a measly 2%.
I didn't know this. Can anyone explain why this is ?

Remember it is the part of your earnings OVER £4189 on which you pay 2%, not your whole earnings. You will still pay 12% on the earnings between £797 and £4189. The reason for this is down to the history of NI.

From 1911 to 1975 the contributions were not income related at all - they were flat rate - and everyone paid the same amount. You literally bought a stamp that was affixed to a card as a record of your contributions (hence getting your cards when you left a job). This was partly because the benefits from your stamps were not income related either - everyone received the same state pension and unemployment benefit. (Flat rate payments to government still persist with things like passports, driving licences etc.)

When paying NI at a percentage was introduced in 1975, it was thought fair for those on low incomes to pay less, but if there was no upper earnings limit then higher earners would suddenly be paying double, triple or even more than before and this was deemed unreasonable (imagine if the £3650 NI you pay on your £40000 salary suddenly went up to £6000). The solution was an upper earnings limit so that nobody would may more than a fixed maximum. This maximum lasted until 2003 when earnings over the upper limit started paying 1%, and this was increased in 2011 to 2%.

Many other "taxes" have maximum payments irrespective of your earnings. Council tax has a maximum amount payable (ie. the highest band). With student loans you do not pay back more than the loan + interest, so there is a maximum amount you will ever pay irrespective of your income.

@MyPatronusIsACat

Pls read my early posts - that triggered your ire. I did not say for furlough to be repaid in one go. I used the sane analogy as graduates repaying student loans. Furloughs (80% of salary) are considerably mmuch more than income support/unemployment benefits. Now, I have no choice in paying my taxes. I find egregious that I will be paying for those who received furlough and that there are no means to clawback (over the long term) from furlough recipients.

@Hawkins001

To also help save, people can look at e.g. Sky packages, virgin, their costas, look at substituting different food brands, minimizing takeaway food, ect, all adds up in expenditure.

I tire of hearing this sort of thing.

Newsflash - many people can't afford those things now. Not everyone has a raft of small luxuries they can cut back on.

The top 5% of earners already pay half of all income tax and 96% of all CGT paid by private individuals. The top third of earners in the UK have the sixth highest effective rate of income taxation in the EU, the bottom two thirds have the lowest effective rate of income taxation in the EU. The problem is not high earners paying tax, it is everyone else.

Agreed. We paid £42000 in tax last year and although it can be argued we earn a lot we live in SE and we are not rich by any means (no new cars, holidays and private schools here).

The super rich and big companies should be paying their full taxes (they never will which is part of the reason they are so rich!) but people earning say £100k a year are getting taxed a lot already so I don't think it is fair to burden the top 5% with everything.

It is a tricky situation - somehow this needs to be paid for, but I know for many it will push them from just surviving into poverty.

@MyPatronusIsACat
Whilst I do not agree that people should have to pay back "furlough" CJRS, I do think that it was too generous as a system, the same with SEISS.

When it comes to SEISS everyone who I know who was eligible to claim it is net better off that previous years because of it, yes their earnings were down, but not as much as the payments for SEISS. With CJRS, especially at the start it was abused by companies, holidays were claimed through it when nothing to do with Covid, people given extra holidays through Covid, many small business owners gamed the system with their staff still working whilst claiming on CJRS etc.

I know plenty of people who were put on furlough, from shielding people who worked for supermarkets to people in industries that were entirely shut down by the government, none of them had the 20% drop and all were on full pay, the company covered the difference (as well as the NI, pensions etc.). The estimate on the news was that something like 75% of people on furlough got full pay rather than reduced pay.

The fact that the latest figures released today, for the period ending 31st July show that 1.6 million people are still on furlough shows that CJRS has gone on too long, nearly all of those people will not be returning to work and will be made redundant as the scheme winds down, because if there was not a job for them in July then there is one one in October (unless you count the 6,000 people who work in nightclubs), either that or their employer was gaming the system. CJRS makes sense if the aim is to avoid redundancies, it makes no sense if it is only used to delay redundancy.

@MatildaIThink

You are clearly another person who was not furloughed, and are woefully clueless about what being furloughed was like for many, and the fact that PEOPLE HAD NO CHOICE. FFS, you make it sound like people were on holiday for a year, being paid 80% of their salary and living it large.

Utterly clueless

It's absolutely bonkers to even suggest those on furlough would pay it back though.

They were mandated by government to not work. It was not a choice. They owe nothing.

How in the world can you not see that? It was not a voluntary leave of absence!!

Above message was addressed to @portico

[quote MyPatronusIsACat]@MatildaIThink

You are clearly another person who was not furloughed, and are woefully clueless about what being furloughed was like for many, and the fact that PEOPLE HAD NO CHOICE. FFS, you make it sound like people were on holiday for a year, being paid 80% of their salary and living it large.

Utterly clueless[/quote]
I wasn't furloughed (NHS) but I can imagine even for people being paid 100% of their wages it must have been worrying - risk of redundancy increased etc. Yes, you didn't have to worry about child care but worrying about finances and job security is no joke.

@BasicDad

It's absolutely bonkers to even suggest those on furlough would pay it back though.

They were mandated by government to not work. It was not a choice. They owe nothing.

How in the world can you not see that? It was not a voluntary leave of absence!!

Exactly. Most ridiculous post on the thread. Utterly ludicrous.