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Dr. Spink
To ask the Secretary of State for Social Security what would be the change in overall marginal tax rate, including national insurance, for each tax banding, if the national insurance upper earning limit were removed; and how much income that would raise in a full year for the Exchequer.
Mr. Hague
If the upper earnings limit for national insurance contributions were removed, the effect on marginal tax rates would be as follows:
| Marginal tas rate including national insurance | ||
| Annual income | With an upper earnings limit per cent. | Without an upper earnings limit per cent. |
| £3,445—£5,945 | 29 | 29 |
| £5,946—£21,840 | 34 | 34 |
| £21,841—£27,145 | 25 | 34 |
| £27,146—£27,145 | 40 | 49 |
Note:
1. Assumes single person's tax allowance of £3,445.
2. Assumes that earnings for N1 purposes are spread evenly throughout the year.
3. Annual upper earnings limit for the payment of NI contributions is £21,840.
Removal of the limit would increase national insurance contribution yield by £2.7 billion in a full year.