The rate of National Insurance (NI) is set to rise following the introduction of the new state pension from 6 April 2016. Normally people in full-time employment pay 12% NI on any earnings between £5,824 and £42,385. However, anyone contracted out of the state second pension, often those people who are in an employer’s pension scheme, pay at a reduced rate of 10.4% NI.
The Government has recently confirmed plans to scrap the state second pension and remove the right to opt out. As a result, from April 2016 those people in company pension schemes and their employers will be required to pay higher NI contributions. Government estimates suggest these changes will affect about 6.4 million people of whom around 1 million will be private sector workers and 5.4 million public sector workers.
If you are worried about the impending changes to the National Insurance rates and you are left wondering what this means for you, please contact our tax team at email@example.com.