Increases to National Insurance & Dividend Tax Rates
Boris Johnson yesterday (07/09/21) announced his long-awaited social care reform and the start of the much-anticipated tax hikes for the masses following the COVID-19 pandemic announcing increases to National Insurance and Dividend tax rates.
The headline points announced yesterday were as follows:
- A new 1.25% ‘health and social care levy’ will be introduced from April 2022. This will be administered as an increase to national insurance rates in the 2022/23 tax year before being partitioned as a standalone levy. The levy will be payable by both employees and employers as well as the self-employed.
- Dividend tax rates will also increase by 1.25% affecting both business owners operating through companies as well as investors.
The health and social care levy will only be payable if earnings are above £9,568 and will also affect those above the state pension age who are normally exempted from national insurance.
The new measures are expected to raise £12 billion a year that is to go direct to frontline services across the UK, including better screening equipment, surgical facilities, faster access to specialist GPs and new digital technology.
Care costs cap
As a silver lining the PM announced that from October 2023 a lifetime care cost cap of £86,000 will be introduced.
Under the new regime those with assets worth less than £20,000 will have no care costs at all and those with assets between £20,000 to £100,000 will have their care costs subsidised.
It is understood that the care cost cap does not include ancillary costs such as accommodation and food so significant costs may continue to be incurred even if the cap is reached.
Some will recall that a similar measure was previously announced and later scrapped by this same government. Only time will tell if history repeats itself but the political damage from reversing these measures for a second time should give some assurance that this will now come in.
Further information can be found here https://www.gov.uk/national-insurance/how-much-you-pay
Please feel free to get in contact should you wish to discuss National Insurance and Dividend tax rates further by calling 01905 794 504 or contact us on our web page here https://ballardsllp.com/contact/