National Insurance payments are increasing in the UK this April. I am seeing arguments against this that say the increase will have a higher impact on the lower-paid.
This BBC article shows the new payment structure in the following image:
It than makes the following statement:
"There are concerns the increase will have a higher impact on the lower-paid.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."
But, I calculated the total new NI annual payment for both £20,000 income and £100,000 income - and my workings show that the NI payment makes up 6.7% of both wages.
New April NI contribution: £1,340
% of wage: 6.7%
New April NI contribution: £6,967
% of wage: £6.97%
Have I misunderstood the BBC comment about the way in which it will negatively impact people on lower incomes compared to those on higher incomes? Is the 12% Vs 2% rate only on a certain amount of their income, after a certain threshold, as opposed to the full income, in the way that I've worked out?