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3 September 2021updated 10 Sep 2021 4:46pm

How raising National Insurance would hit working-age people hardest

Young people would suffer a hit to their incomes 16 times greater than those aged over 75.

By Ben Walker

Britain’s elderly are the most supportive of proposals to increase National Insurance (NI) to fund social care, but are also the age group who would suffer the smallest financial hit from the increase. Resolution Foundation analysis published earlier this year found that middle-age households would lose the most from a 1p rise in NI contributions. Older households (over the age of 65) would experience only a negligible hit.

Increasing National Insurance would hit working-age households hardest
Proportional percentage change in average disposable income in the event of a 1p increase to National Insurance

Young households (those aged between 20 and 24) have, on average, similar disposable incomes to that of those aged 75 and over, and yet under a rise to National Insurance would suffer a hit to their incomes 16 times greater than their older counterparts.

A rise in income tax would be more evenly shared across all age groups. As the Resolution Foundation noted: “Lower earners pay more under a NI rise than they would from an income tax rise. Even some workers earning under £10,000 a year would be affected by a NI rise, while only those earning over £12,570 pay income tax.”

According to YouGov, support for a rise in NI to fund social care is divided, perhaps unsurprisingly, by age. Those over 65 are most supportive of the policy change, with 82 per cent backing an increase. Among those aged between 25 and 49, meanwhile, support stands at just 44 per cent. Nevertheless, a majority (57 per cent) of the country back the tax rise. 

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