National Insurance to increase by 0.5% in 2011

In his pre budget report on Monday, Alistair Darling announced an increase of 0.5% in National Insurance which will come into effect after the next election in 2011.

In a move that surprised many pundits, Alistair Darling has announced a 0.5% rise in National Insurance contributions that will apply to all NI rates.

A 0.5% rise in National Insurance will raise £5 billion a year for the government.

Increasing National Insurance will affect employees and employers alike, increasing the payroll costs of large organisations such as the NHS.

A 0.5% increase will cost an employee earning £40,000 an additional £1000 a year.