PM hikes National Insurance, dividends tax to pay for social care reform : CityAM
Britons will be hit with £12bn-a-year tax rises to pay for increases in NHS and social care spending, with National Insurance and dividends tax in Boris Johnson’s crosshairs.
A new Health and Social Care Levy will effectively hike National Insurance Contributions for employees and employers by 1.25 per cent from April 2022, while taxes on dividends will also increase by 1.25 per cent to ensure the self-employed do not try and avoid the new levy.
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The tax hikes have been criticised widely by Tory MPs and party grandees, with the increase in National Insurance breaking a manifesto promise from the 2019 election.
The plan is being described by Number 10 as “the biggest catch up programme in UK history” and will see the majority of the £36bn spent in the first three years from the tax increases on improving the NHS waiting list – currently at 5.5m people after Covid-19.
After 2024-25, more of the funding will go toward paying for social care costs in a long promised reform of the system.
Speaking in the House of Commons, Johnson said: “Some will ask why we don’t increase income tax or capital gains tax instead, but income tax isn’t paid by businesses so the whole burden would fall on individuals – roughly doubling the amount the total taxpayer is expected to pay.
“The total revenue form capital gains tax is £9bn this year – our new levy will share the costs between individuals and businesses and everyone will contribute according to their needs.”
From October 2023 people with assets of between £20,000 and £100,000 will still contribute to their adult care costs, while people with assets of under £20,000 will not pay for any of their care costs.
The maximum cap on individual costs will be £86,000 – about three years of care costs – while the rest will be paid by the government.
Proceeds from the levy will be ringfenced to ensure they are spent on health and social care only.
More to follow