National Insurance and dividend tax rises have been announced by the government to fund social care reform
Prime Minister Boris Johnson has proposed a number of tax increases for taxpayers across the UK.
- From April 2022 there will be a new, UK wide 1.25% Health and Social Care Levy to be ring-fenced for health and social care. Initially, this will take the form of an increase in current rates of NICs by 1.25 percentage points. From April 2023, the Levy will be legislatively separate i.e., it will be a new tax in its own right.
- All working adults, including those over state pension age, will pay the Levy.
- Reliefs will apply for employers of apprentices under the age of 25, all employees under the age of 21, veterans and new employees in Freeports.
- The rates of income tax on dividends are also expected to increase from April 2022 by 1.25 percentage points to help fund this package. Accordingly current rates of 7.5%, 32.5% and 38.1% are expected to increase to 8.75%, 33.75% and 39.35% respectively.
- The Levy means that people starting care from October 2023 would not pay more than £86,000 over their lifetime (excluding accommodation) and those with assets of less than £20,000 will not make any contribution. The amount of help given to anyone with assets between £20,000 and £100,000 will be means tested.