Chancellor ‘claws back half of gains to millions of higher earners’ through NI hike not mentioned in speech

The Chancellor has been far less generous to millions of higher earners than appeared at first sight, according to detailed study of Budget papers by mutual insurer Royal London.

In his speech, the Chancellor announced that the starting point for higher rate income tax would increase from £46,350 to £50,000.   This will reduce the income tax rate on the slice of pay between £46,350 to £50,000 from 40% to 20%.

But a detailed paper published alongside the Budget says that the upper earnings limit for national insurance contributions will be increased in line with the rise in the increase in the floor for higher rate tax:

“The National Insurance contributions Upper Profits and Upper Earnings Limits are aligned to the higher rate threshold and will therefore also increase in 2019 to 2020”.