This topic contains 19 replies, has 13 voices, and was last updated by  mutt 3 months, 1 week ago.

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  • #4273

    Dave perry
    Participant

    Just reading this https://www.theguardian.com/commentisfree/2018/apr/09/dementia-sell-home-britain-health-lottery

    and this jumped out

    “He hinted that younger people might take out social insurance for their care needs in old age, as part of an “equitable” approach to funding.”

    So what was all the National Insurance I have paid all about then?

  • #4274

    Ali
    Participant
    • #4275

      Dave perry
      Participant

      Interesting, but not as much fun as being outraged.

      • #4284

        fred
        Participant

        You could get outraged about the automatic enrolement private pensions instead? That’s fairly obviously a prelude to taking away some or all of the state pension we’ve paid for through NI.

  • #4276

    oldguy
    Participant

    So what was all the National Insurance I have paid all about then?

    The NI you pay is all spent by the state with the rest of the taxes you pay and doesn’t go into any special “pot”.

    All it is income tax, but with a different name.

    • #4277

      Ali
      Participant

      Not quite right. It affects your pension if you haven’t paid 35 years worth of payments.

      • #4281

        oldguy
        Participant

        Yes, but that is not what I’ve said. The point is that the money is not put in a separate pot or anything of the sort, it is spent the same as any other taxes (in fact more is spent than is being raised)

        All there is a law that says that if you have paid NI for X years you’ll get Y of state pension at the end. Obviously there is zero guarantee whatsoever that the law won’t change in the future.

        In short : you should not count on getting any state pension. If we get some, great, but there isn’t any money being put aside to pay for it, so, I wouldn’t rely on it.

  • #4278

    pete
    Participant

    NI is not an insurance policy, it is a tax with a fancy name and some slightly awkward criteria around it. I wish they’d abandon the pretence and just build it into income tax.

    • #4279

      ted
      Participant

      We could stick VAT and all the other taxes, local and national, into one lump as well (although that wouldn’t actually work) but then people might realise exactly how much they pay in taxes.

      They might also begin to ask where does it all go.

      • #4283

        callum
        Participant

        You get a letter every year from HMRC telling you exactly where everything goes. It includes a pie chart which, if you look very closely, with a magnifying glass, even allows you to see the amount spent on that terrible EU thing.

        https://www.gov.uk/government/publications/how-public-spending-was-calculated-in-your-tax-summary/how-public-spending-was-calculated-in-your-tax-summary

      • #4286

        fred
        Participant

        They might also begin to ask where does it all go.

        Not exactly hard to find out.

        https://www.ukpublicspending.co.uk/uk_total_spending_pie_chart

        Isn’t it bizarre how the biggest part of the pie is that part that actually goes back to individuals – both rich and poor – in cash payments? I guess this is the bit that those who complain about how much tax they pay and how it’s all wasted want to cut? Oh, wait a minute…

        • #4287

          ted
          Participant

          Any idea what ‘other’ spending consists of?

          It’s a sizeable chunk at 17%.

        • #4290

          nev
          Participant

          Try clicking the little plus by “other spending” in the table below. There really isn’t some conspiracy to prevent you knowing how the money is spent.

        • #4292

          mutt
          Participant

          That’s one reason why the government are slowly raising the lowest tax band. Someone on minimum wage working 37 hours a week really shouldn’t be paying any tax. It must cost more to administer and collect than it raises.

          Makes more sense to increase the basic rate by 1p and raise the lower threshold. Most people will still pay the same by the time it’s collected and given back.

          The last labour government really made a mess of it buying middle class votes.

    • #4280

      logi
      Participant

      I agree – but that would distort the presentation of the tax bands, which are in fact:

      So 0-£8424 is tax free (lower NI threshold)

      8425-11850 is 12% (to income tax threshold)

      11851-46351 is 32% (to higher rate threshold for income tax)

      46352-46384 is 52% (to rate reduction threshold for NI)

      46384- is 42% (40% income and 2 % NI)

      Then the effective 62% through 100000-120000 (personal allowance removal)

      Then 47% above 150k

      Having two sets of overlapping variable bands is stupid.

      • #4282

        stew
        Participant

        Can you add student loan thresholds in there? As they are effectively a graduate tax.

      • #4288

        Matty
        Participant

        It is my view that paying more than 50% tax (plus VAT, road tax, etc.) is the limit before earning starts to be discouraged.

        How do others think those tax bands should change ?

        • #4289

          nev
          Participant

          Scandinavia?

          But then once you start losing 60%+ of your income in tax you are discouraged and decide personal or family time is better value, then what? Those who earning less pick up some of that work and everyone benefits.

          One thing is for certain the UK isn’t exactly at peak tax.

        • #4291

          joe
          Participant

          A series of simple bands with small steps of x% from a to b, y% from b to c etc etc etc with x% < y% up to some limit z% that applies to c and above.

          To me that’s fair but I won’t argue it’s fair. Fair is just personal opinion.

          It means that if two people each earn an extra £50 the one who earns less never gets less of that £50 than the one who earns more.

  • #4285

    fred
    Participant

    I’m always amused by how many people don’t understand how NI works. Everyone seems to think it goes into some big ‘special’ pension savings account which is then paid back to you when you retire. Sadly not the case.

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