The thinktank cautions that only the upper half of earners in the UK will reap the rewards of reduced NI payments.

Resolution Foundation has warned that the lower half of earners will not benefit from the reduction in national insurance payments next week, as their income tax bills will increase in April. The thinktank notes that the combination of lower national insurance contributions and a freeze on income tax thresholds will only favor earners in the top half, with incomes of £26,000 or more. It predicts that those earning around £50,000 per year will benefit the most. These findings are a setback for the government, which has advocated for the reduction in Nics as part of its long-term goal to decrease taxes for UK households. Jeremy Hunt, meanwhile, has indicated that the government plans to reduce taxation as the economic situation improves. Speculation of a possible May election has also arisen, with rumors of cuts to inheritance tax and other levies in the upcoming spring budget. Rishi Sunak is reportedly open to supporting an election in May, after most households have experienced the national insurance increase but before the full impact of the freeze on income tax thresholds is felt. However, the Resolution Foundation states that real wages, accounting for inflation, will still be lower than they were in the December 2019 general election, and that by the end of 2024, real wages will remain the same as they were in 2006. The thinktank attributes almost two decades of lost income growth to stagnant wages following the 2008 financial crash and the subsequent rise in inflation. It notes that British households are on track to be 4% (or £1,200 on average) poorer going into the next election compared to the previous one, a historic occurrence that should be prevented in the future. The report also highlights that while average households have benefited from the rise in interest rates, the gains primarily went to wealthier and older households, offsetting the higher financing costs for mortgage payers who needed to remortgage their loans. Overall, rising mortgage and rent expenses, as well as the end of cost-of-living payments, will result in income falls for the poorest households, while the richest half can expect income increases in 2024. Despite the complexities of this situation, the overarching narrative for the parliament is clear: British households will be poorer at the end of the term than at the beginning, a situation never before seen in modern British history.

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