A week ago News OnTheWight wrote to the MP Bob Seely asking him 13 questions following the Conservative’s recent budget.
One of those was, “How many pounds will the average person on the Isle of Wight save a) with the basic rate at 19p from 20p and b) the NI changes?”
Unfortunately that was one of the many questions he chose not to answer, so we’ve been researching and contacting various organisations since then in an effort to bring Islanders the numbers.
Office for National Statistics data
The research has led us to the Annual Survey of Hours and Earnings (ASHE) that’s run and published each year by the Office for National Statistics (ONS). It’s the most comprehensive source of information on the structure and distribution of earnings in the UK.
It’s based on a 1 per cent sample of employee jobs taken from HM Revenue and Customs’ (HMRC’s) Pay As You Earn (PAYE) records.
From here they split the earnings of the employed (full/part time and male/female) in local areas into percentages, from the lowest to the highest.
Latest IW salary data
The latest gross annual pay figures available are used, 2021. Due to the way these figures are gathered, they aren’t exact, but will give a strong guide to how Islanders will be affected.
The calculations News OnTheWight has done on the tax and National Insurance (NI) is based on official figures, carried out to the best of our abilities and have been looked over. (Many thanks to Wilfred Armfield who took time out from his Maths Masters to help us out).
The tax changes come into effect in April 2023. In April 2022, the Conservative Government increased NI contributions by 1.25 per cent, the new budget by them reverses this from 6th November 2022.
Getting to the numbers
The median salary – ONS’s preferred measure of average earnings – for those employed on the Isle of Wight is £21,597.
They will save £90.27 a year from the 1 per cent tax reduction from 19 per cent to 20 per cent. The National Insurance (NI) yearly saving (1.25 per cent) will be £112.66. Combined, this will be £202.93, working out to be £3.90 a week in the pocket.
The breakdown
If you earn under ~£12,570 – on the Isle of Wight that’s 2 in 10 of the employed – there’s no benefit, as you’re not paying tax or NI.
3 in 10 employed here earn £15,280 or less – If they’re earning the top figure in this range they’ll have an extra £1.17 a week in their pockets.
For the over-average earners, things get better, unsurprisingly, as they’re paying more tax and NI to start with.
6 in 10 of those employed on the Island earn £25,013 or less. If they’re at the top of that range, they’ll keep £5.38 a week more.
The high end
The highest salary that the ASHE has figures for – the 80th percentile – earns £36,305 or less. Those on the top end of this will have an extra £10.27/week, or £533.86/year.
(The figures above that are too varied for the ONS to be certain enough to say (There’s over 20% variance in them))
Another way of thinking about the 80th percentile is that the top 20 per cent of employed people on the Isle of Wight earn more than £36,306.
Men and women: Big difference
On the Isle of Wight there’s a large difference between what men and women earn, this is illustrated in the difference between the average (median) salary, with men getting £25,695 and women £17,025 – meaning men getting roughly half as much more.
At these salaries, men will be keeping £5.68/week of their salary, women £1.92/week.
Smallest benefit
The group with the smallest benefit is female part time employees (which ONS think there’s around 11,000 of). The highest figures that ASHE have published is of the 60th percentile, which shows 6 in 10 earn £12,519 or less, so do not pay tax or NI, so have zero saving for the new budget.
Breakdown of average IW salaries
| Percentile | Max salary | Tax sav. | NI sav. | Yearly saving | Weekly saving |
|---|---|---|---|---|---|
| 10 | £7,779 | £0.00 | £0.00 | £0.00 | £0.00 |
| 20 | £12,472 | £0.00 | £0.00 | £0.00 | £0.00 |
| 25 | £14,580 | £20.10 | £24.95 | £45.05 | £0.87 |
| 30 | £15,280 | £27.10 | £33.70 | £60.80 | £1.17 |
| 40 | £18,965 | £63.95 | £79.76 | £143.71 | £2.76 |
| 60 | £25,013 | £124.43 | £155.36 | £279.79 | £5.38 |
| 70 | £30,095 | £175.25 | £218.89 | £394.14 | £7.58 |
| 75 | £33,316 | £207.46 | £259.15 | £466.61 | £8.97 |
| 80 | £36,305 | £237.35 | £296.51 | £533.86 | £10.27 |
| 90 | x | x | x | x | x |
Article edit
8.41pm 5th Oct 2021 – Hat tip to Wilfred.
