Government plan to raise National Insurance

Ministers have announced a tax hike to pay for an £86,000 personal cap on lifetime social care costs in England, and tackle NHS backlogs.

The 1.25% point rise in National Insurance, a tax paid by workers and employers, will begin in April 2022, before becoming a separate Health and Social Care Levy from April 2023.

Along with a 1.25% point hike in dividend tax from next April, it is expected to raise £12bn a year for the next three years.

Analysis prepared for the government by HMRC, said in 2022-23 a worker on the median basic rate taxpayer’s income of £24,100 would be expected to pay an additional £180 per year.

While, employees on the median higher rate taxpayer’s income of £67,100 would be expected to pay an additional £715.

The majority of the £36 billion fund raised by the rise over the next three years will go towards tackling the backlog of NHS cases, which has worsened during the COVID-19 pandemic. £5.4 billion over the next three years will go towards changes to the social care system.