Scotland facing £820 million National Insurance tax bombshell as cost-of-living crisis bites

  • Typical family in Scotland set to pay an extra £130 in national insurance contributions (NICs) this year as cost-of-living crunch hits.
  • Local businesses are also set to feel the squeeze with a £493m tax hit.
  • Lib Dems demand emergency VAT tax cut to put money back in pockets of struggling families.

Families and businesses in Scotland are facing a tax bombshell of over £822m this year due to the Conservative government’s hike to national insurance, research by the Liberal Democrats has revealed.

National Insurance payments went up this week (April 6) from 12.5% to 13.25%, after Boris Johnson’s decision to break a Conservative manifesto promise and hike the tax.

The latest figures from the Office for Budget Responsibility predict that the country is facing a £10.9 billion tax hit this year from the move, with around 40% of this being paid by workers and the rest by businesses.

Analysis of official figures by the Liberal Democrats shows this means families in Scotland are set to pay out an estimated £329m more in National Insurance contributions. This comes to an average of almost £130 per household, at a time when families are already facing soaring heating bills.

The Conservatives’ broken promise is also set to hit high streets across Scotland hard, with a £493m tax raid on local businesses including shops, restaurants and cafes. 

The Liberal Democrats have set out plans to “kill two birds with one stone,” by slashing the top rate of VAT to 17.5% this year. The move would save families an average of £600 and give businesses a boost by encouraging spending and keeping prices low. The party has put the issue at the heart of their elections campaign which launched this week.

Liberal Democrat Treasury spokesperson Christine Jardine said:

“Families in Scotland are being crippled by the worst cost of living crisis in a generation, struggling to put food on the table and afford sky-high energy bills. 

“The last thing they need is an unfair tax raid. Yet the Conservatives are piling on the misery by breaking their promise not to hike up national insurance, in a move that will hit our community hard.

“The Liberal Democrats are fighting for a fair deal that would put money back into people’s pockets through an emergency tax cut. Our plans would kill two birds with one stone, helping those struggling to make ends meet while giving our treasured local businesses the shot in the arm they need.” 

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