The Prime Minister Boris Johnson has announced a 1.25% hike to National Insurance Contributions starting from next April (2022). The £12bn additional revenue raised per year will be ringfenced and used to help fund health and social care - including the backlog the NHS is dealing with due to the pandemic.
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In a statement in the House of Commons he revealed the increase will help clear waiting lists, which could reach 13 million by the end of this year.
Social care in England is only free for people with savings and assets below £23,250, but it varies for other countries in the UK. Scotland provide personal care for free but require assessment, however those in homes still have to pay toward housing costs. Wales caps care costs and care in a person's own home is free for those over 75 in Northern Ireland. The raise in NI contributions will still apply to devolved countries and provide £2.2 billion per year.
Plans announced today apply to England only, and reduce the asset threshold to £20,000 from October 2023 with those with assets from £20k to £100k receiving means-tested support. A cap of £86,000 will be applied to those required to self-fund care costs.
£86,000 is roughly the cost of care for three years.
People working after state pension age will also pay the 1.25 percent levy as well as those who receive dividend income with an increase of 1.25 percent to dividend tax rates.
From April 2022 the health and social care levy of 1.25 percent will be taken as an increase in NIC deduction for PAYE, however from 2023 it will be listed as a separate deduction on payslips.
Employers' national insurance is also set to increase by 1.25 percent.
The new rates from 2022 will be:
|Class 1 Employers Over Secondary Threshold||15.05 percent|
|Class 1 - Primary Threshold to Upper Earnings Limit||13.25 percent|
|Class 1 - Over Upper Earnings Limit||3.25 percent|
|Class 4 - Primary Threshold to Upper Profits Limit||10.25 percent|
|Class 4 - Over Upper Profits Limit||3.25 percent|