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?

[quote Porridgealert]@thatonehasalittlecar
"Everyone I know who was furloughed would have much rather been working / earning instead of cowering at home worrying about their loved ones"

Do I think that most people would rather have worked than have covid exist? Yes.

Do I think that those people who were sat at home in the garden ordering paddling pools and outdoor furniture online were cut up about being on furlough? No.[/quote]
So? Does it matter if every single one of them had the time of their lives? Was the money only worth it if they were miserable?
What did you want them to do? Turn up at a closed workplace and demand to do something? What possible difference can it make if some people on furlough enjoyed some of it.
And if companies put people on furlough when they shouldn’t have, that’s on them, not the employees.

@Knittingupastorm. I was responding to a postr who implied people didn't want to be on furlough. You're just reinforcing what I said. People enjoyed being on furlough. I never said they should be miserable. Personally I loved receiving money for no work. I'd be happy to be on furlough to retirement.

@ilovecardigans

What about limiting tax relief on pension contributions for higher rate taxpayers? Or cap tax relief at 10% on all pension contributions?

The first suggestion is likely to happen, and rightly so. I say that as a higher rate taxpayer who stands to lose from such a change, but come on! Higher rate taxpayers hoover up a huge proportion of the pension tax relief.

I suspect that one of the reasons for adding the extra to NI, rather than income tax, is that you can’t reduce NI by upping your pension contributions.

I suspect that one of the reasons for adding the extra to NI, rather than income tax, is that you can’t reduce NI by upping your pension contributions.

I think, although could be wrong because I’m far from an expert, that if you have a salary sacrifice arrangement for your pension then the employee and employer save on NI. It’s one of the pension options offered by my work.

I’m just annoyed it will completely negate the similar amount pay ‘rise’ that I will get as a council employee .

@jamdonut

I’m just annoyed it will completely negate the similar amount pay ‘rise’ that I will get as a council employee .

At least you get one. Dh and are police, no pay rise for us, not even 1% that everyone sneered at.

@CookL

I find that hard to believe. At the worst they will have medical insurance but I believe most high earners use private medical services.

DH and I are in top 12% as a household. Most of our friends are top 10%. I don't know anyone who routinely uses private health care. IVF, occasional medical appointment, sure but routine GP appointments, surgery etc. All NHS.

You have three children, a large mortgage and work part time. Banking on nothing ever going up was a huge risk. If you had to pay for medical care for the five of you it would cost way more than the increase you will have in NI.

@nanbread

The money needs to come from somewhere.

Yeah it does. How about the top 5% instead of those on 20k.

Yep, pretty sure these guys could be doing a bit more

@Knittingupastorm

I suspect that one of the reasons for adding the extra to NI, rather than income tax, is that you can’t reduce NI by upping your pension contributions.

I think, although could be wrong because I’m far from an expert, that if you have a salary sacrifice arrangement for your pension then the employee and employer save on NI. It’s one of the pension options offered by my work.

That’s correct for workplace schemes operating on a salary sacrifice basis, but not for SIPPs, which are a popular vehicle for people who want something to run alongside a workplace scheme.

Workplace schemes often have a cap on contributions, or an unpalatable retirement date (one of my workplace schemes is tied to state retirement age, for example).

In any event, it would be easy for wealthier people to reduce income tax in this way.

@Akire

Same with people lower end working with UC top up as wages low. Lose £20 week UC plus £20 month for extra NI so big drop of £100 for them

^ this will be the difference between eating and not eating for some people. Cut back on non essentials, I am pretty sure you will manage.

Agreed household income must be around 100K pa if the NI increase will cost you £73/month.
The advantage of using NI rather than increasing income tax is that both employers and employees will contribute to sharing the burden.
Other options would have been raising more from inheritance taxes say a 20% tax on estates worth more than 50,000 or reducing the huge cost of working tax credits as it seems ludicrous to be paying benefits to people working part time when there are record job vacancies and labour shortages.

@Porridgealert

Your experience isn’t the same as mine. As I said, everyone i knew who was furloughed was not having the time of their lives, they were extremely worried and scraping by.

I didn’t know all that many people on furlough, though. Most people in my industry - 95% according to an industry survey - were out of work completely within days of lockdown. No furlough, potentially some SEISS, and a great deal of worry.

I'm on 20k, single parent and the increase is only about £10 a month but it's a bit of a kick in the teeth along with the UC cut. I know we will manage but it's just a bit crap really. I work from home and so my heating/electricity is going to be used much of the day this winter. 🙁 I would be less concerned if I knew the money would be used appropriately. I've got experience of the social care system as my dad had dementia and the threshold for them to step in is very high- I had to file an adult safeguarding report for them to take me seriously (dad was violent).

I don't get the vitriol aimed at people who were furloughed either, being able to still work over the 18 months has saved my sanity.

@lllllllllll

2 earners on 50k each are not earning massive amounts.

Is this a joke? Two earners on 50k each can easily afford this tax. In fact they should be paying more if anything!

This. ^ Saying a couple earning 50 grand a year each is 'not that much,' is an insult to people who don't earn a lot. (And that is WAAAAAY more than people who earn over 50 grand.)

Sick of this shit I am.

I don't get the vitriol aimed at people who were furloughed either, being able to still work over the 18 months has saved my sanity.

Just wait until the tax rises arrive to start paying for the ASTRONOMICAL furlough bill

Saying a couple earning 50 grand a year each is 'not that much

But surely not that much is very different to not earning massive amounts.

I think 50k is a good salary but it's not a massive one.

@repog

Saying a couple earning 50 grand a year each is 'not that much

But surely not that much is very different to not earning massive amounts.

I think 50k is a good salary but it's not a massive one.

It's a household income of £100k. That's a huge amount in comparison to the average. Maybe not in some jobs or locations, but compared to the majority of households in the UK, yes it is a massive amount.

I'm sorry I just don't agree that it's a massive amount. You have to remember when people talk about top 5% of earners or similar that is not entirely representative of all income. Plenty of people on high income won't be on the PAYE system.

@repog

No need to be sorry - It's ok to agree to disagree!

£100k household income is double the household income of two people on the average wage, assuming both work full time. Average household income would be less than £50k as that's based on both parties working full time. I think that at least double is massive 🤷🏻‍♀️

But my point is you can't just look at wages & income tax to give you a true representation.

Energy prices are going up, food prices are going up. If it’s that tight you may be in some serious trouble by the end of the year. 😳

A lot of increased costs at the same time. I'm going back to the office - so £100 a month commuting costs, 2 big energy cost hikes in 6 months - £25 a month extra, food has gone up - I think by about £25 per month (for our family), plus £40 a month extra NI. That's £190 increased living costs over the space of a year. I'll suck it up by cutting elsewhere but it is a decrease in living standards.

For those who think they’re paying to protect ‘rich’ people’s inheritance can I just remind you that if you are buying or own your own home you are protecting yourself as well. My mum owns half of our house - bought together mid nineties. It’s worth less than £200,000 but would have to be sold to realise the funds if she were to need full time care. And IMO the government has only done half a job - why are they not looking at the astronomical fees charged by even some of the most modest care homes. An elderly relative was quoted £800 a week and i just don’t see how this is justified.

@PeonyTime

To be paying at that level, you have a household income around 70k.

I'm more concerned by the people at the other end of the earning spectrum, sorry.

I agree. Also, when people take out mortgages they should build in a buffer contingencies such as inflation. If you cannot afford a £70 a month increase, then you didn’t do this. On the other hand, mortgage interest rates have dropped in the past 2 years - would you be in a position to remortgage on a lower rate over a longer period in order to reduce your monthly payments?