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PBR: National Insurance to jump 0.5% from 2011

Chancellor Alistair Darling has announced all rates of National Insurance contributions will rise by 0.5 per cent from April 2011.

But, in his pre-Budget report announcement, he told the commons he would raise the starting point of contributions inline with income tax to ensure people on modest incomes would not see themselves paying more.

He said: “I propose from April 2011 to increase by 0.5 per cent all rates of National Insurance contributions but to ensure this increase does not fall on those on low and modest incomes I have also decided to raise the starting point of National Insurance contributions to align it to the rate of income tax so no one under £20,000 will pay any more as a result.”

Darling also pledged to reduce the personal allowance of those earning between £100,000-£140,000 from April 2010, so they get the same benefit as basic rate taxpayers. He said, for those earning above £140,000, the full value of their personal allowance will be withdrawn.

He said: “I want to remove the long running anomaly of the income tax system by which personal allowance is worth twice as much to higher rate tax payers as it is to basic rate taxpayers.”

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