The Guardian reports that the annual tax bill is set to rise an astronomical £3000 per household by 2027, while energy prices are also set to sore in the UK.
The Government states “From 6 April 2022 to 5 April 2023 National Insurance (NI) contributions will increase by 1.25%. This will be spent on the NHS and social care in the UK.” Separately in a policy paper Health and Social Care Levy they go on to specify “From April 2023 onwards, the National Insurance contributions rates will decrease back to 2021 to 2022 tax year levels and will be replaced by a new 1.25% Health and Social Care Levy where the revenue will be ringfenced to support UK health and social care bodies.”
The Government are facing criticism of the NI increase due to concerns that there will be a significant impact on lower income households. The BBC reports “This is because workers pay 12% National Insurance on earnings between £9,564 (£9,880 from April) and £50,268. However, earnings above this amount attract a rate of just 2%. So, if your income rises above £50,000, National Insurance takes a smaller proportion of your wages. The Health and Social Care Levy will work the same way as National Insurance.” Resolution Foundation says “real wages will fall in 2022 in ‘weakest decade for pay growth since 1930s”
While the rise in NI is evidently going to have a substantial impact on employees, it is undoubtedly also going to affect employers too, many of whom are still trying to recover from the financial instability presented by the pandemic. The Government have announced that employers’ National Insurance contribution will also be increasing by 1.5% from April 2022. This means the rate for employers will stand at 15.3% on all earnings above the secondary threshold for most employees. PWC reports “For employers, the increase comes at a time when businesses are steeling themselves for a jump in corporation tax from 2023. Employment taxes already account for a sizable chunk of the taxes directly borne by businesses. Our research shows that in 2020, employer NIC accounted for 25.7% of all taxes borne - those that come at a direct cost - by the UK’s biggest listed firms.” Whether your membership organisation pays corporation tax or not will depend on the type of organisation and the nature of the activities being undertaken.
Ofgem, the energy regulator for the UK, has increased their price cap – the amount that energy suppliers can charge customers for each unit of energy, meaning that the average household energy bills look to increase £693 per year which is going to have a considerable impact on many, especially low-income households, but also businesses, including professional bodies, trade associations and charities. Capify reports “There isn’t one specific reason why costs are going up so fast, but it’s been reported that the price of wholesale gas has gone up by 250% since January 2020. A combination of factors including gas shortages across Europe, lower renewable energy generation and higher demand from Asia are all contributing to the problem.” SME’s are particularly going to feel the squeeze as the prices increase persists from domestic to business.
It’s not just gas prices that are causing the problem either, as electricity prices for SMEs also reached record highs in the second quarter of 2021.
Analysis by Cornwall Insight suggested that power prices reached the highest level since the research company’s records began in the second quarter of 2012.
is some light at the end of the tunnel as the Government suggest there may be support packages made available.
It's pertinent too add that any individual paying membership fees to a professional body may be able to claim tax-relief on their membership fee providing the membership is required or relevant to their job, you can find out more on the Government website here.