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Abolish Employee National Insurance

Manifesto 1.0 proposes the complete abolition of employee National Insurance (NI) as part of a wider restructuring of personal taxation.

Employees would no longer have a separate National Insurance deduction from their wages. Instead, the manifesto proposes a single, transparent progressive income-tax system, integrated with the Universal Standard Income (USI).

1. The proposition

Employee National Insurance would be abolished. The distinction between Income Tax and employee NI would be removed and employment income would instead be taxed through the manifesto's proposed progressive income-tax structure.

This is not intended as an isolated tax cut. It is one part of the wider Manifesto 1.0 settlement involving the USI, the Personal Allowance, welfare reform, employment and economic growth.

2. Why abolish employee National Insurance?

For millions of employees, the amount shown as Income Tax on a payslip does not represent the full direct tax deducted from earnings. Employee National Insurance is a second major deduction from employment income.

Manifesto 1.0 therefore asks a straightforward question: why maintain two major taxes on a person's earnings when one clearer progressive system could show more transparently what people contribute?

The intended principle is simple: provide a financial foundation through the USI, expect participation from those capable of it, and make the taxation of work clearer and easier to understand.

3. Employee NI and employer NI are different

The proposal concerns employee National Insurance. Manifesto 1.0 records the employee Class 1 structure as 8% between the relevant thresholds and 2% above the Upper Earnings Limit, and proposes removing employee NI entirely.

Employer National Insurance is treated separately. Rather than abolishing it immediately, Manifesto 1.0 proposes progressively reducing employer NI from 15% to 10% over ten years, with the aim of lowering the cost of employing people and encouraging businesses to invest in employment.

4. The proposed progressive income-tax structure

Abolishing employee NI does not mean that employment income becomes tax-free. The manifesto proposes a new progressive income-tax structure with the following marginal rates:

Income	Proposed marginal rate
£0–£40,000	33%
£40,001–£50,000	40%
£50,001–£150,000	45%
£150,001–£250,000	47.5%
£250,000+	49%

These are marginal rates, not rates applied to a person's entire income. The higher percentage applies only to the portion of income falling within that band.

5. How the USI fits

The tax reform is designed to operate alongside the Universal Standard Income. The USI would begin at £4,000 per year and increase progressively over ten years towards an initial benchmark of £12,570, subject to fiscal sustainability.

As the USI rises, the conventional Personal Allowance would progressively reduce by the value of the USI. At the full year-ten structure envisaged by the manifesto, the individual would receive a £12,570 USI, have no conventional Personal Allowance, pay no employee National Insurance, and pay progressive Income Tax from the first pound earned.

6. Work should pay

Proposal 01 established the security side of the proposed settlement: a Universal Standard Income, introduced progressively, with participation normally required from people capable of work.

Proposal 02 develops the reward side of that bargain. When somebody works and earns money, the system should be clear about what is deducted and why.

Manifesto 1.0 proposes removing employee NI as a separate tax and placing personal taxation within one progressive structure.

7. The intended benefits

Simplicity. One clearer personal taxation system should make it easier for people to understand what they contribute.

Transparency. The tax system should show more clearly the direct taxation of earnings rather than splitting it between Income Tax and employee National Insurance.

Rewarding work. The wider settlement is designed around the principle that employment, training and participation should be financially worthwhile.

Coherent reform. Employee NI abolition is intended to operate alongside the USI, progressive Income Tax, Personal Allowance reform and the wider restructuring of working-age support.

A new social contract. Government provides greater basic financial security; those capable of contributing are expected to contribute; and the taxation of work becomes simpler and more transparent.

8. The fiscal challenge

This proposal should not be presented as costless. Employee National Insurance is a substantial source of government revenue, and abolishing it must be considered as part of the manifesto's overall tax-and-spending architecture rather than as a stand-alone giveaway.

Manifesto 1.0 treats its figures as working estimates rather than OBR-certified costings.

A future government would require detailed HM Treasury and HMRC modelling of earnings, employment responses, behavioural change, tax avoidance, benefit interactions and the overall distributional effect of the new system.

9. What this proposal is — and what it is not

It is a proposal to abolish employee National Insurance as a separate deduction and integrate the taxation of earnings into a progressive income-tax structure.

It is not a claim that workers would pay no tax.

It is not the immediate abolition of employer National Insurance.

And it is not intended to be assessed separately from the USI and the wider tax reforms proposed by Manifesto 1.0.

The objective is to set out the proposition clearly enough that workers, employers, economists, politicians and members of the public can examine it, challenge it and identify where the model succeeds or fails.

10. The challenge

Key figures at a glance

Measure	Manifesto 1.0 position
Employee NI	Abolished
Personal tax structure	Single progressive Income Tax
Income-tax bands	33% / 40% / 45% / 47.5% / 49%
Starting USI	£4,000
Year-10 USI benchmark	£12,570
Personal Allowance	Reduced progressively as USI rises
Employer NI	Reduced from 15% to 10% over ten years