Martin Lewis issuing payslip warning to Brits after Budget announcement
Martin Lewis has issued a warning to Brits about their payslips following on from Chancellor of the Exchequer Rachel Reeves' Budget setting out the United Kingdom's finances for the next year.
The Budget took place on Wednesday (30 October) and saw Chancellor Reeves outline the country's economic policy for the upcoming year.
The first Labour government to put together a Budget in 15 years, included a first of its kind tax on vaping as well as massive changes to car tax and how much some people will pay.
Inheritance tax laws were also cracked down on, with the tax relief enjoyed by many farmers removed. None other than Diddly Squat Farm's Jeremy Clarkson is among those impacted by the law change; a change that is set to cost his estate millions.
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But the big policy change in Reeves' Budgets concerned national insurance (NI) and more importantly, how much your employer pays in to the pot.
Everyone over the age of 16 pays NI, whether you're an employee, employer, or self-employed. The cash goes towards funding the NHS and state benefits.
Under Reeves' plans, the NI rate for employers have been upped by 1.2 percent to 15 percent from April 2025.
And on top of this, the government has said employers must start contributing to the pot after the first £5,000 has been paid to an employee. Before her announcement, the rate had been £9,100, with both tax rises on businesses set to raise £25 billion a year.
During Thursday night's The Martin Lewis Money Show on ITV1 and ITVX, Lewis was grilled on what this means for people and their pay.
Asking Lewis a question, one member of the audience said: "I pay both employer National Insurance and employee National Insurance.
"Out of what I earn, has the Budget reduced my take home pay?"
Explaining, Lewis said: "Yes."
That's because the member of the audience worked through something called an umbrella company, which is business often used by recruitment agencies to pay temporary workers. Lewis explained: "There are around 700,000 people who work through umbrella companies.
"They're often freelancers or supply teachers and they are counted as PAYE workers for an agency, but they're sort of self employed."
Tax specialist Karri Mellon, who appeared on the show, added: "Yes, that's correct, because where you have companies which have sole directors and employees, they will not qualify for the employment allowance. So the company is going to be paying more employers' National Insurance, and that, therefore, means that the employee will have less to take home because they pay their own employer's National Insurance."
General employees are also set to feel the pain, according to critics of the NI hike, saying that the increase will result in lower pay rises, if any at all, as well as stagnated job creation. In some cases, it could result in job losses due to increased costs, Reeves has been warned.
The Office for Budget Responsibility (OBR), which is the country's official economic forecaster, said 'most' of the increased NI cost would be passed on to workers and consumers from employers through lower wages and higher prices.
Rain Newton-Smith, chief executive of the CBI, which claims to represent 170,000 firms, said the burden on business would make it 'more expensive to hire people or give pay rises'.
Topics: Martin Lewis, Money, Politics, Business, Cost of Living, UK News
Tom Earnshaw