A UK-wide National Insurance hike is set to take £3.6 million out of Fife Council coffers.

The 1.25 per cent rise for a “health and social care levy” will be introduced next April and will be paid by working adults including people over the state pension age – unlike normal national insurance, which is not paid by pensioners.

Initially from April 2022, national insurance contributions rates will go up by 1.25 per cent however from April 2023, the levy will be separated and, at this point, working adults above state pension age will start contributing.

At a Fife Council meeting on Thursday, administration co-leader David Alexander said the full implications were still being worked out.

“Come April, we are going to see maybe an increase in national insurance because of the care service shambles in England. It is going to affect people who have not paid national insurance since they retired,” he said.

“This increase is going to impact on Fife Council by £3.6m straight off our budget. I don’t have a number over and above that. I have no doubt this is going to become an issue when looking at pay increases. It is going to have an impact on absolutely everything.”