Tax increases on the horizon?

Boris Johnson and the Conservative Government have just announced proposals to increase taxes to raise up to £12bn a year to tackle NHS backlogs and overhaul social care.

The key tax changes that are being proposed are:

  • A 1.25 percentage point increase in National Insurance Contributions for both the employee and employer from April 2022 – this new levy will also apply to those working past the State retirement age
  • Tax on share dividends to increase by 1.25 percentage points also from April 2022
  • An £86,000 care costs cap per person for those starting to receive care after October 2023
  • A £20,000 asset threshold at which you start to pay for care, with some means tested support for those with assets between £20,000 and £100,000 and no support for those with more than £100,000 of assets (until they’ve paid £86k)

The current proposals suggest that these tax increases will be reviewed in 3 years and that from April 2023, the NIC increases will be rebadged as a Health and Social Care Levy as a separate line on payslips.

It is expected that Parliament will be asked to vote on these proposed changes in the coming days.

The changes will only apply in England, as Scotland, Wales and Northern Ireland have separate arrangements for social care

Get in touch

If you’re concerned about these announcements, please speak to your usual PM+M adviser, or get in touch with us at enquiries@pmm.co.uk.

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