Rishi Sunak’s “sham tax” gets 125,000 more poor workers to pay Social Security

The Chancellor has been criticized for failing to raise Social Security thresholds in line with the rate of inflation – a move which research now says will see the average worker pay £45 more a year

Rishi Sunak is accused of introducing a “secret tax” that will result in nearly 125,000 of the poorest workers paying more on Social Security.

The minimum wage, at which workers pay the soon-to-be-increased tax, rises from £9,568 to £9,880 a year next month.

That’s better news than the income tax threshold, which will be frozen for four years in a camouflage tax expected to raise more than £12billion.

Student loan thresholds will also be frozen, forcing graduates to spend more of their income on repayments as wages and prices rise.

But the threshold rise of NICs is still below inflation. The social security threshold rises 3.1% – despite inflation at 5.5% and fears it could soon surpass 8%.

Research by the House of Commons library for the Lib Dems found that between 95,000 and 125,000 fewer people would be required to pay Social Security if the threshold were instead increased by 7.25%.

And the average worker paying Social Security would have to spend £45 less a year.

The Treasury earns a further £2.4bn in 2022/23 – including the sum it receives from employers – by not raising the threshold by 7.25%.

It’s a similar problem to Social Security and pensions, which are also rising just 3.1%. The number matches last fall’s inflation — but it’s spiraled out of control since then.

Liberal Democrat Treasury Department spokeswoman Christine Jardine said: “Families are facing the worst drop in living standards in 50 years, but Conservatives are pounding people with even more covert taxes.

“This unfair move will force thousands more people to pay taxes, while tax bills will continue to mount for millions more next year. Meanwhile, small businesses struggling to survive face a hidden tax on their employees’ salaries.

“It rubs salt in the wound of the government’s broken promise not to increase Social Security. Rishi Sunak needs to speed up the migration and offer families and businesses a lifeline by reducing VAT instead.”

Social security itself will increase from 12% to 13.25% from April 2022.

Despite intense pressure from the Tories, Rishi Sunak dismissed calls for the hike to be canceled in Wednesday’s spring declaration today.

He told Sky News: “Every penny of this tax goes straight to the things that matter most to them” – the NHS and social care.

However, he did not rule out an adjustment to the payment threshold, which is currently much lower than the personal income tax allowance of £12,570.