Employees should now expect to pay 13.25% of their weekly earnings towards National Insurance, up by 1.25% from 12% this 2022/2023 tax year.
April marked a number of growing monetary challenges for UK households. This included skyrocketing energy bills, petrol costs and an increase in inflation. To make matters worse, individuals face further financial difficulties with the enforcement of new levies and a rise in National Insurance contributions.
In order to calculate how much your national insurance contributions will increase by, make use of this online Government calculator here.
In order to overcome this rise in payment contributions, there are a number of schemes that both employers and employees are able to access help.
1. Government schemes and tax relief
This is a great start if eligible. Government schemes can be used to help to ease the financial burdens of everyday life. To name a few, these include the Winder Fuels Payments scheme and the Warm Home Discount Scheme. Both of these schemes were established to help the elderly, as well low-income households to assist with bill payments.
The Winter Fuel Payments scheme helps out those born on or before the 26th September 1965 with heating bill costs. The scheme provides between £100 to £300 to those eligible. Furthermore, the Warm Home Discount scheme provides a one-off payment of £140 to those eligible. This discount is taken off their electricity bill running between winter 2021 to winter 2022.
It is further important to note that the UK Government will additionally introduce an energy bills rebate in October. This will reduce energy bills by £200 for households across the UK. This £200 rebate will be required to be paid back over the course of five years.
Finally, those who work from home regularly may be eligible to claim further tax relief on household costs, including gas bills, energy and electricity. The HMRC offers relief of around £312 with no requirements for any receipts.
2. Spending to save on taxes
In the UK, salaries fall into four tax brackets. This is all dependent on annual earnings.
One way in which individuals can reduce their tax liabilities is through tax-efficient spending. A number of ways can be completed to fulfill this – including Gift Aid charity donations, both physical to charity shops and through direct monetary donations to a charity, tax-efficient investments and pension contributions.
3. Personal allowance transfers
Personal allowances refer to a portion of an individual’s wage that is entirely ineligible for taxing purposes. For the 2022/2023 financial year, this amount stands at £12,570.
In instances of a relationship where one’s spouse may not use all of their personal allowance, this can be transferred to their partner if they are a basic rate taxpayer. Doing so will essentially reduce their joint tax burden.
One example is the Marriage Allowance. This allows a spouse to transfer £1,260 to their legal partner. It is however estimated that up to 2.4 million of UK couples that qualify for the Marriage Allowance have not opted for it.
