People across England could see their council tax bill rise next year due to the National Insurance hike.
The new hike in National Insurance paid by businesses and individuals from April 2022 will see the contribution rise from 12% to 13.5%.
Councils with directly employed staff will get part of a £2billion pot from the government to help with this additional cost, but MPs stated that the issue will hit councils which outsource services like bin collections to private companies.
These councils will face huge bills in National Insurance contributions.
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In a potential double-whammy to taxpayers, they could see their council tax rise as councils try to deal with the hike.
Tory MP Geoffrey Clifton-Brown told the Public Accounts Committee of MPs last night that councils may be forced to hike council tax to help pay the additional costs.
He said: “A waste collection company providing 100% of their service to the local authority—will they or will they not have all their NICs reimbursed?
“If they don’t, the cost goes up for local authorities and it will then have to go on to council taxpayers.”
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The Treasury will not promise council contractors will get any government compensation.
Instead, Cat Little, Director General for public spending at the Treasury, reiterated that “all direct employees of the public sector will be compensated for.”
Boris Johnson confirmed last week a percentage point increase of 1.25% on National Insurance for both employers and employees UK-wide from April 2022 to raise £12billion a year for both health and care.
That will cost £180 a year for a worker on £24,100 and £255 for a worker on £30,000.
The tax will have a different title from April 2023, where it will appear as a ‘Health and Social Care Levy’ on payslips.