Health & Social Care Tax
posted 10th September 2021
What are the new plans?
From April 2022 the rate of National Insurance contributions you pay will change for one year.
The amount you contribute will increase by 1.25% which will be spent on the NHS and social care across the UK.
This increase in NIC will apply to:
Class 1 (paid by employees), Class 4 (paid by self-employed) & Secondary Class 1, 1A and 1B (paid by employers)
The class you pay depends on your employment status and how much you earn.
If you are working age and earn less than the NI Primary Threshold or Lower Profits Limit you will pay nothing.
Employers will only pay on earnings above the Secondary Threshold.
But from April 2023, NI will return to its current rate, and the extra tax will be collected as a new Health and Social Care Levy.
How much will the tax changes cost me?
The increase will see an employee on:
£20k a year pay an extra £130
£30k a year pay an extra £255
£50k a year pay an extra £505
£80k a year pay an extra £880
£100k a year pay an extra £1130
All working adults, including those working over the pension age, will pay the levy and the rates of Dividend Tax will also increase by 1.25%.
The top 14% earners will pay around half the Revenue and Employers will also contribute.
This will raise around £12 billion in extra funding per year, to be invested in frontline health and social care across the UK over the next three years.
This plan means no one in England will now have to pay more than £86,000 in care costs over the course of their lifetime. This is equivalent to around three years in care. This will apply regardless of where they live, how old they are, what their condition is, or how much they happen to earn.
At the same time, the government will support those without savings - with the state covering all care costs for anyone with assets under £20,000.
Anyone with assets between £20,000 and £100,000 will be expected to contribute to the cost of their care but will also receive state support, which will be means-tested.
The new £100,000 limit is over 4 times higher than the current limit of £23,250, meaning many more people will be eligible for support than under the current system.
The government will set out a detailed plan later in the autumn.
