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?

Someone on £80k would pay an extra £880 a year. So you the OP must have a very healthy household income. If you can’t afford a £73 reduction on the income you have then something is wrong. You surely must have allowed some leeway in your budget for fluctuations in bills etc. I don’t earn that amount, there is just one of me supporting three youngsters and I could afford it.

No one minds paying more until they have to pay it. And then people start scrambling round looking for reasons why it shouldn't be paid.

I'm not looking for reasons not to pay it, I know exactly why it's needed because I see it on every damned shift I work, before and during covid.
I don't think it's going to improve that, which is what we're being told it's for, because historically, no fee increase has improved social care.
If you think that this money is going to get to the people who need it the most - those recieving social care, then you're deluded. Care companies recieved money during covid, including mine, to help with the extra costs associated with the pandemic, we saw nothing of that to assist with how the workload doubled overnight.
So while the money is desperately needed, unless there's a directive attached to ensure it ends up improving care and not profits, it will just end up in providers pockets.

If you are going to be paying another £900 pa that means you have a household income of around £100k pa. If you are in a situation where your household income is £100k pa, but a cost increase of £75 pcm is devastating there is something seriously wrong with your finances.

This is sort of my thinking too. You do have to factor these sort of changes in when making financial decisions. I get that it’s stressful but sounds like you have overstretched. Is there anything you can cut back on? The change is not coming in until April so you do have a little time to figure things out.

All the people who are questioning the budgeting skills of the OP. WHAT PLANET DO YOU LIVE ON?! Housing is incredibly expensive for those who have bought recently, it’s crippling. I bet you’re sitting on a nice load of equity. Often their is no choice. Renting is more than a mortgage and not secure.

Yep or when you say your childcare bill is 1.2k then you shouldn't have had children. Plus on 80k you could easily be paying £400/500 a month into a pension scheme.

You are right @PersonaNonGarter many people live to their full means because there is no choice! People on decent incomes who purchased a house recently in certain regions are mortgaged up to the hilt, because there isn’t a better alternative bar moving far away from friends and family??

And this is on top of the forthcoming big hike in fuel prices and ongoing rising food prices. A lot of people are going to be feeling the pinch.

@BlueFairiesinthesky

I think the OP is talking about 2x £40k incomes, the increase will be average for a 2 parent middle class family on decent but not high wages.

Just wait until you all go to renew your gas and electricity tariff. I got a shock this week! £50 more a month for the best deal available

So yeah we need to find an extra £120 a month. We live in an expensive part of the country where housing costs and childcare are very high.

We will have to forgo the £100 a month we put into our ISA, which we’re saving for children’s university and our retirement.

It’s really shit.

2x £40K is £780 extra, 1x £80K is £880 extra. Plus 2x £40K is better in terms of tax rates and retaining Child Benefit. I don’t think OP is talking about 2 roughly equal earners.

@BlueFairiesinthesky yep i've often been told I should move out of London. But I was born & raised here to immigrants & have zero other ties outside of London. I'm just entitled to stay in my community & near family as those who are priced out of Cornwall etc.

@BlueFairiesinthesky

Yes, I’ve just done a gas/electricity comparison, ours will be £40 a month more. I did the same comparison last week and it was £28 a month more. The cheapest tariffs are going up and up.

I’m an NHS worker and basically my payrise will be taken up with the NI rise. Bit of a kick in the teeth. No furlough, no grants. Although I am eternally grateful to be in a secure job.

@BlueFairiesinthesky

All the people who are questioning the budgeting skills of the OP. WHAT PLANET DO YOU LIVE ON?! Housing is incredibly expensive for those who have bought recently, it’s crippling. I bet you’re sitting on a nice load of equity. Often their is no choice. Renting is more than a mortgage and not secure.

OP said they were upsizing - which can mean from rented, but sounds much more like they were selling and buying. So, not the same as someone entering the housing market for the first time.

upsizing is very difficult these days & many are stuck on the ladder.

@longue But it’s not just the NI increase. Gas and electricity prices has skyrocketed.

My family are needing to find an extra £120 pcm. Yes we can do it, but it is undeniably a big dent in the budget. For no extra utility- In fact services are getting worse... so that’s the reason people will feel resentful.

I will happily pay it and support it, however it will definitely hurt us. We will feel it as a young family who purchased recently in a fairly expensive area. I have sympathy for the squeezed middle AND low income families!

Personally I think I’m going to have to reduce my charitable giving which is sad at a time when the charities I give to really need it. But once our car loan is paid off I can give again. I’m sure lots of people will be reducing giving though as a result

Our household payments will rise a fair bit due to the rise! The thing is, if we could genuinely believe it was for the good of the country and we actually thought it would make a difference it'd be an easier pill to swallow, but I worry that it won't even help. On top of regular tax, council tax etc it seems like it'll be another cost where we don't see the benefit in society around us. I keep my fingers crossed that it'll make a real difference and won't just disappear into the local / central government black hole!

@Cocomarine fair dos, I missed that bit of info

We are going to struggle too!

We have a good joint household income and it's taking an additional £7 a month.

Do you both pay NI, do you receive any benefits. A 20k salary would be charged £130 extra a year, £10 a month.

.... to clarify the £120 is for the energy rise (about £60 for us- cheapest I can find that’s green) and NI rise!

So lovely for me to be charged an extra £250 a year after taking a pay cut and having no bonus for two years in a row.

Great. Bye bye holiday.

@nanbread

The money needs to come from somewhere.

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

Why do that when the Tories can shaft the poor?

@cricketmum84 I think you may have miscalculated that. From what I’ve read an average income of £50k combined will pay an additional £30 per month.

Salary - Extra NI (per year)
10,000 - 5
20,000 - 130
25,000 - 193
30,000 - 255
35,000 - 318
40,000 - 380
50,000 - 505
60,000 - 630
80,000 - 880
100,000 - 1130
150,000 - 1755

Just be grateful you didn't die of covid. Now it's payback time.

For some families, cut back on certain expenditure, e.g. Sky or virgin, netflix, those £3 coffees or drinks each day, shop at Aldi or lidi , rather than e.g. Waitrose, ect

I know not all of these apply to all, but it's points to look at

[quote WhyOhWhyOhWhyyyy]@cricketmum84 I think you may have miscalculated that. From what I’ve read an average income of £50k combined will pay an additional £30 per month.[/quote]
Yup I totally did miscalculate it 😳 I've asked MNHQ to pull my comment lol.