Middle-income families hit by pre-budget report, says expert

Friday, December 11th 2009

A financial expert has said that the chancellor's decision to increase national insurance contributions could have the biggest impact on middle-income families.

In his pre-budget report, Alistair Darling increased national insurance contributions by 0.5 per cent.

Only those who earn over £20,000 will be affected by the increase - in order to protect middle-income families, the chancellor claimed.

But Martin Bamford, chartered financial planner at Informed Choice and Surrey region chairman for the Institute of Financial Planning, disagreed.

The 0.5 per cent rise for 2011-12 is in addition to a rise of 0.5 announced previously - meaning that contributions will actually see a one per cent increase, he noted.

He added that when you start to look at such details, it becomes apparent that "it is the middle income families who will really suffer".

Mr Bamford claimed that the news headlines have focussed on taxes for the wealthy, such as the bonus tax for bankers.

The chancellor announced that a levy of 50 per cent on individual discretionary bonuses above £25,000 will be paid by banks.

"Whilst the announcements were bad news for most taxpayers, things could have been much worse," said Mr Bamford.