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Last Updated:  Tuesday, 11 March, 2003, 13:17 GMT
Majority 'clueless' as to NI rise
Shoppers on the High Street
Ignorance about the changes to NI is widespread
Six out of 10 people have no idea how much April's rise in National Insurance (NI) contributions will cost them, research has found.

Nearly half the workers surveyed by professional services firm KPMG do not believe that the penny in the pound contribution rise will have any impact on their spending.

The research also revealed that many employees do not expect their often hard pressed employers to pay for the rise in NI through higher wages.

The NI contribution rise was announced in the last budget and from the new tax year employees contributions will rise from 10% to 11% on income of more than 89 a week up to 585.

And for the first time the government has decreed that the extra penny rise will apply on earnings above the 585 per week threshold.

Spending to be cut?

It is not only employees who face contribution rises, businesses will have to pay an extra penny in the pound on the wages of their employees.

Unlike previous rises in NI contributions this increase will have a greater impact on the wealthy.

The NI increase means that an employee on a salary of 20,000 will have to pay an extra 154 a year, while someone earning 50,000 will be 506 worse off.

Andrew Smith, chief economist at KPMG said: "A 1% hit may not sound like huge amount to people but it is likely to contribute to a significant slowdown in consumption."

The poll was conducted by YouGov on behalf of KPMG and questioned 2,491 people.




SEE ALSO:
Q&A: National Insurance rise
10 Mar 03 |  Business
A pension of 7 pence a week
13 Dec 02 |  Business


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