National Insurance contributions to increase by 1.25 percentage points as Boris Johnson announces plan to reform social care

WORKERS’ National Insurance contributions are to be increased by 1.25 percentage points in April 2022 next year to reform social care – although critics have said that Boris Johnson has broken the 2019 Conservative manifesto.

Tuesday, 7th September 2021, 4:06 pm
Prime Minister Boris Johnson speaking in the House of Commons, Westminster, where he has announced a 1.25 percent increase in National Insurance. Picture: House of Commons/ PA Wire

The Prime Minister broke an election promise as he declared a rise in national insurance to address the funding crisis within health and social care.

Mr Johnson has stated that national insurance is set to rise by 1.25 percentage points from next April, rising from 12 per cent of income to 13.25 per cent, for most workers.

The new social care levy was signed off by ministers at a Cabinet meeting this morning, after backbenchers voiced their fury against the plans.

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The Government is also increasing the rate of dividend tax by 1.25 per cent to ensure people who receive income from dividends make the same contribution.

Downing Street said that a typical basic rate tax payer who earns £24,100 would pay £180 a year, while higher rate earners on £67,100 will pay £715 due to the new tax rules.

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The 1.25 percentage point increase is set to raise £12bn a year and will be used to tackle the NHS backlog that was caused due to the Coronavirus pandemic. This includes £2.2bn for Scotland, Wales and Northern Ireland as tax changes are set to affect the whole of the UK.

A new cap of £86,000 on lifetime care costs from October 2023 will protect tax payers from ‘losing everything’.

Those with assets of less than £20,000 will not have to make a contribution from their housing wealth and personal savings.

Currently, anyone with assets worth more than £23,250 has to find their care in full.

Mr Johnson pledged in 2019 that he had a clear plan for health and social care as he promised not to raise national insurance.

Admitting that the pledge had been scraped in Parliament today, Mr Johnson said: ‘No Conservative government ever wants to raise taxes and I will be honest with the House, yes, I accept that this breaks a manifesto commitment, which is not something I do lightly.

‘But a global pandemic was in no-one’s manifesto and I think the people of this country understands that in their bones and they can see the enormous steps this Government and the Treasury have taken.

‘After all the extraordinary actions that have been taken to protect lives and livelihoods over the last 18 months, this is the right, the reasonable and the fair approach.’

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