Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if she will make an assessment of the potential merits of introducing progressive banding for National Insurance.

National Insurance contribution rates are part of an overall progressive system.

The personal allowance (PA) is set at £12,570 this year, meaning the first £12,570 an individual’s income is tax free. Above the PA, income tax is paid at 20 per cent, until the higher rate threshold of £50,270 above which income tax is paid at 40 per cent, and then 45 per cent for income above £125,140 per year (the additional rate threshold).

Employee NICs also start to be paid for earnings above £12,570 at 8 per cent, with this rate decreasing to 2 per cent above £50,270 per year. Taking NICs and income tax together, this means an overall progressive rate structure for earnings of 28 per cent for basic rate taxpayers, 42 per cent for higher rate taxpayers, and 47 per cent for additional rate taxpayers.