National Insurance: how the UK's parties are approaching contributions and tax ahead of the general election

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  • National Insurance contributions are a key focus in party manifestos
  • They are crucial for funding healthcare and state pensions
  • Parties’ proposed changes to National Insurance could impact your take-home pay and benefits
  • Here’s how National Insurance policies reflect each party's vision for the UK's future

As the UK gears up for the general election on 4 July, one of the pivotal issues at the heart of party manifestos is National Insurance.

National Insurance contributions underpin the country's welfare system, funding essential services like healthcare and state pensions.

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With economic stability and social welfare on the line, the policies surrounding National Insurance are not just fiscal matters - they reflect broader visions for the nation's future.

Here, we’ll delve into what each major political party is proposing with regards to National Insurance, allowing you the opportunity to make informed decisions about your contributions and benefits.

These are the promises and plans that could shape the financial and social landscape of the UK in the coming years:

(Photo: BEN STANSALL/AFP via Getty Images)(Photo: BEN STANSALL/AFP via Getty Images)
(Photo: BEN STANSALL/AFP via Getty Images) | AFP via Getty Images

The Conservatives

Rishi Sunak launched the Tories’ General Election manifesto with a £10 billion headline pledge to cut employees’ National Insurance contributions.

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Confirmation of the pledge to take 2p off National Insurance contributions by April 2027 was the nearest thing to a rabbit-out-of-the-hat moment at the famed Silverstone motor racing circuit where the launch took place.

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The Conservatives have also pledged to get rid of National Insurance for four million self-employed workers, but experts have questioned how these tax-cutting promises would be funded and who stands to benefit.

The Tories say they want to recognise the contribution of “risk-takers and entrepreneurs” to the economy, with the party’s election campaign in full swing as it hopes to win over voters.

The manifesto outlines promises to abolish entirely the mandatory tax, known as Class 4 contributions, by the end of the next Parliament.

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That means that within the next five years, self-employed workers making profits of up to £50,270 a year could pay zero National Insurance. Those earning more than £50,270 would still pay a tax rate of 2% on their profits, however.

Labour

Labour’s manifesto focuses on a goal of generating economic growth and making Labour the “party of wealth creation”.

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Sir Keir Starmer has said Labour had a plan to turn the country around after 14 years of Tory “chaos” but cautioned that there would be “no quick fix” if he is handed the keys to No 10 by voters on 4 July.

The manifesto confirms Labour’s pledge not to raise income tax, VAT or National Insurance and to cap corporation tax at its current 25% rate.

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It also spells out Labour’s plans to raise £7 billion in taxes; some £5.2 billion would come from closing loopholes for non-domiciled people and cracking down on tax avoidance schemes.

£1.5 billion would come from imposing VAT and business rates on private schools, with the rest from closing a carried interest loophole and increasing stamp duty on purchases of residential property by non-UK residents by 1%.

Liberal Democrats

The Liberal Democrats are promising to modernise employment rights to make them “fit” for the age of the gig economy.

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The party’s manifesto announced plans to set up a new “dependent contractor” employment status in between employment and self-employment, with rights such as minimum earnings levels, sick pay and holidays.

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The tax and National Insurance status of employees, dependent contractors and freelancers would be reviewed.

The Green Party

The Green Party’s manifesto sets out the party’s intention to tax the top 1%, as part of an overhaul of the tax system, and raise up to £70 billion for public services.

Co-leaders of the party Adrian Ramsay and Carla Denyer pledged to “mend broken Britain” at the manifesto launch event in Hove on Wednesday 12 June.

The manifesto pledges to raise the National Insurance rate to 8% on annual wages above £50,270, and bring in a wealth tax of 1% annually on assets above £10 million and of 2% on assets above £1 billion.

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Along with other tax measures – such as removing the upper earning limit that restricts the amount of National Insurance paid by high earners – the party estimates it could raise additional revenue of between £50 billion and £70 billion.

Plaid Cymru

Plaid Cymru launched its General Election manifesto in Cardiff, with promises to provide “fairness” for people in Wales.

The manifesto says the party will investigate increasing National Insurance contributions for higher earners, and supports the introduction of a wealth tax.

Reform UK

Reform UK is fighting the election on immigration, pledging an “employer immigration tax” on companies that choose to employ overseas workers instead of British citizens.

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This would see businesses paying a National Insurance “premium” of 20% of an employee’s salary, as opposed to 13.8%, if the worker is from overseas. It has also promised there would be no tax on earnings under £20,000 a year.

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