§ Dr. SpinkTo ask the Secretary of State for Social Security what would be the change in overall marginal tax rate, including national insurance, for each tax banding, if the national insurance upper earning limit were removed; and how much income that would raise in a full year for the Exchequer.
§ Mr. HagueIf the upper earnings limit for national insurance contributions were removed, the effect on marginal tax rates would be as follows:
Marginal tas rate including national insurance Annual income With an upper earnings limit per cent. Without an upper earnings limit per cent. £3,445—£5,945 29 29 £5,946—£21,840 34 34 £21,841—£27,145 25 34 £27,146—£27,145 40 49 Note
1. Assumes single person's tax allowance of £3,445.
2. Assumes that earnings for N1 purposes are spread evenly 748W throughout the year.
3. Annual upper earnings limit for the payment of NI contributions is £21,840.
Removal of the limit would increase national insurance contribution yield by £2.7 billion in a full year.