A study from NerdWallet has revealed just how complicated Britain’s relationship to National Insurance truly is.
In the light of the 1.25% hike to National Insurance, set to take effect on 6 April 2022, 79% of respondents expressed their unhappiness with the impending increase.
Yet at the same time, close to half (47%) of respondents stated that, given the ongoing reports of an underfunded NHS and struggling social care services, they agreed with the government’s decision. That is far higher than the 28% of respondents who actively disagreed.
Further reflecting how knotty the issue is for the British public, 54% of respondents also felt that a National Insurance hike isn’t necessarily the best way for the government to fund the NHS and social care, and that there are other options it could implement to raise money.
These conflicted feelings towards National Insurance in part arise from people’s lack of education around their contributions. Four in 10 respondents don’t understand what their contributions are for, while the same amount do not know how much they currently pay in National Insurance each month. Similarly, 46% said they were unsure about the reason for the hike.
This lack of knowledge around National Insurance may have informed the public’s perception of how the hike will impact their personal finances.
According to NerdWallet’s study, more than two thirds (69%) of respondents are either already making changes to their financial behaviour to account for the NI increase, or intend to do so from April 2022. Reduced spending on takeaways, clothing and social activities, as well as food shops and petrol, were some of the top-ranked changes Brits intend to make.
This is despite the fact that for someone earning £30,000 a year – a little below the median UK salary in 2021 – the hike will only amount to around £21.30 in lost income each month.
“Of course, rising costs are never welcome. And for those living on the breadline, the smallest loss can have the biggest impact,” said Connor Campbell, a personal finance expert at NerdWallet. “However, we recommend that Brits thoroughly research how the National Insurance hike will affect their day-to-day finances before making any drastic changes. This will provide the best platform from which to create or alter their budget and make any necessary adjustments to spending habits.”
Campbell went on to say: “At the same time, the hike is just one of many extra costs set to hurt the bank accounts of the British public, with higher energy prices and rising inflation already squeezing people’s budgets. So, you can’t blame Brits for fretting over National Insurance. But the more informed you are about where your money goes, the better equipped you will be to deal with any changes.”
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/