The 'earnings threshold' for NIC is lower than the personal allowance for income tax; and for basic rate taxpayers, total NIC is 25.8% of earnings above the threshold but income tax is only 20% of earnings above the personal allowance.
At the top of the basic rate band, it's £9,786 NIC and £6,900 income tax.
Above that, it flips over, NIC is 'only' 15.8% of earnings but income tax is 40%.
The break-even point at which you pay the same amount of NIC as you do income tax is about £58,300, which you can check here, so only the top few per cent of employees actually pay more income tax than they do NIC.
VAT raises approx. the same amount as National Insurance, meaning that a majority of employees probably pay more in VAT than they do in income tax as well.
Just sayin'.
Snowy
47 minutes ago
6 comments:
It's sooo depressing when you post these findings .....
L, dirty job but somebody has to do it.
@MW @L
Has always been obvious to anyone like me who employs people because of the split between NI (ers end ees) and Tax on the monthly payment to HMRC.
Nice to see the calcs done, though.
Sh, thanks and exactly.
Sh Me too. I just don't like being reminded....
The incidence of employee-related taxes is on the employer, regardless of who is nominally responsible for paying the tax.
From there it is passed on to customers in higher prices or absorbed in reduced profits, and thence backwards to landlords and ends up by cutting into land rental value.
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