The 1.25% increase in National Insurance contributions from 6 April 2022 will cause seven in 10 Brits to change their financial behaviour, according to independent financial comparison website NerdWallet.
Of those set to alter their financial habits, half of respondents said they are already making a change, while the other half will wait until the National Insurance hike comes into effect before taking action.
The National Insurance hike itself is not the only financial hurdle Brits are facing in the new year: high inflation and rising energy prices are all contributing to the nation’s anxiety about its bottom line.
And with 67% already struggling to stick with their household budgets, there are a number of actions people are considering to curb the impact on their take-home pay.
Most of the changes involve essential expenses, such as fuel and food shopping. For example, 48% of respondents said they were looking into switching energy providers, with 16% stating they are definitely changing providers as a direct result of their reduced take-home pay.
Nearly a quarter (24%) of Brits will be shifting where they shop due to the hike, while half (50%) are considering a change.
People were also evaluating potential changes to their non-essential spending, including cutting back on meals and take-aways (21%), social activities (16%), gym and club memberships (9%), and holidays (13%).
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The festive period, which is traditionally an expensive time of year, is also being reconsidered – with over one in 10 intending to buy less this Christmas.
NerdWallet spokesperson Connor Campbell commented: “Deductions to the bottom line will always be unpleasant. But, before panicking, we recommend calculating the actual cost of the 1.25% hike on your net salary.
Our research showed that four in 10 respondents did not know how much they currently spend on National Insurance. However, if you calculate how much you pay, and deduct the increase from your current budget, you will have a better idea of how it will impact you directly. For example, at a salary of £30,000 a year, you will pay an extra £21.30 a month.”
“It’s always good practice to review your outgoings and spending habits, especially when there are changes to your circumstances such as rate movements, new expenses, tax increases or an adjustment to your salary. In the case of the National Insurance hike, working out exactly how much extra you will pay a month will give you a better perspective on which financial habits, if any, need to be altered ahead of April 2022,” added Campbell.
NerdWallet has put together a guide to the new National Insurance rates, how much more money will end up coming out of your wage packet and what you can do to help manage any changes to your personal finances.
To find out how the National Insurance increase might impact you, head to: nerdwallet.com/uk/personal-finance/rise-in-national-insurance-contributions/
For more information on NerdWallet please visit: www.nerdwallet.com/uk/
