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Boris Johnson outlines new 1.25% health and social care tax to pay for reforms – National Insurance increase NICs

A new health and social care tax will be introduced across the UK to pay for reforms to the care sector and NHS funding in England. It will raise £36bn for front line services over the next three years. 

The PM accepted that this broke the pledge the conservatives made in their most recent manifesto but stated that a ‘global pandemic’ was not in any party’s manifesto.  

The tax will begin as a 1.25% rise in National Insurance from April 2022 paid by both employers and workers and will then become a separate tax on earned income from 2023 – calculated in the same way as National Insurance and appearing on an employee’s payslip. 

Income from share dividends – earned by those who own shares in companies – will also see a 1.25% tax increase. 

Proceeds from these rises would lead to £12bn a year going into catching up on the backlog in the NHS created by COVID-19, increasing hospital capacity for nine million more appointments, scans, and operations. 

The money will also go towards changes to the social care system, where a cap will be introduced on care costs from October 2023 of £86,000 over a person’s lifetime.  

All people with assets worth less than £20,000 will then have their care fully covered by the state, and those who have between £20,000 and £100,000 in assets will see their care costs subsidised. 

If you have any queries regarding the above please do not hesitate to contact Amy on amy@hbaccountants.co.uk.  

Adapted from: https://www.bbc.co.uk/news/uk-politics-58476632 

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