Tax blow to middle-income earners

By Jennifer Hill, Personal Finance Correspondent

LONDON (Reuters) - Millions of people on middle incomes in the country will pay up to 500 pounds per year more in tax, according to details released by the Treasury.

Workers earning more than 34,840 pounds will pay additional national insurance contributions (NICs) from next April, in a move that will hit over four million people.

Details of annual upratings to thresholds for 2008/09 were released by the Treasury almost two weeks after Chancellor Alistair Darling's delivered his first pre-budget report.

National insurance is currently levied at 11 percent on earnings of between 5,200 pounds and 34,840 pounds.

The figures show that, while the lower threshold below which no NICs are payable is being increased by just 5 percent to 5,460 pounds, the upper threshold will rise by 15 percent to 40,040 pounds.

That will mean that the tax bill of anyone earning 41,000 pounds will rise from 3,320 pounds to 3,814 pounds.

The move will put further financial pressure on Middle Britain.

Many families are already struggling to cope with rising mortgage costs, on the back of five increases in the base rate since August last year, and record rises in the cost of living.