National Insurance is UK’s third biggest tax – which area is paying the most?

Treasury chief grilled over National Insurance hike

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The east of England pays the largest proportion of National Insurance revenue out of any other region, at 18.91 percent, research by Wright Hassall shows. This is followed by the West Midlands which pays 18.44 percent of the Government’s total National Insurance revenue.

Robert Lee, Head of Corporate at Wright Hassall, told “Taxes are an important part of keeping a country running, funding all sorts of social and economic activities that improve our lives.

“There are a wide variety of taxes that the Government collects from both individuals and businesses, ranging from VAT and corporation tax to National Insurance and stamp duty.

“How these taxes affect our lives can be difficult to envisage, with Government spending going to so many different projects and initiatives up and down the country.

“People might often wonder where all the money goes and what it’s spent on. After all, it’s your hard-earned money, so seeing where it is making a difference is a great way of reassuring yourself that your tax contributions are not being squandered.”

National Insurance contributions form a significant proportion of the UK Government’s national revenue.

For example, data from the Office for Budget Responsibility shows that NICs raised £145billion in revenue between 2019 to 2020.

This represented 17.5 percent of all tax revenue at the time.

The main reason that NICs are a substantial source of Government revenue is that personal income makes up the majority of total national income.

Data from Wright Hassall also shows that Northern Island’s National Insurance contributions constitute the smallest percentage of the Government’s NI revenue, at 15.61 percent.

Just above Northern Island in the list is Wales which pays 16.18 percent.

According to Wright Hassall, National Insurance contributions are the third biggest tax in the UK in terms of revenue generated for the Government.

Government data shows that NICs tax receipts in the UK from April 2021 to December 2021 amounted to £18.2billion.

This was £7.8billion higher than in the same period a year earlier.

The majority of National Insurance contributions revenue – an estimated 58 percent between 2021 to 2022 – comes from employer contributions, according to Tax Lab.

Employee contributions provide a further 39 percent.

Contributions made by the self-employed are a relatively small source of revenue, accounting for less than 2.5 percent.

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Unlike most taxes, NIC receipts are paid into the National Insurance Fund and are used to pay for state pension and other contributory benefits, where an individual’s past payment record has influence on the size of payments they receive.

NICs are not levied on other income, such as income from savings and investments, rental income from property, private pensions, state pensions and other social security benefits.

They are formally divided into classes.

NICs on employment income are Class 1 NICs, employees pay primary Class 1 NICs, while employers pay secondary Class 1 NICs.

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