Boris Johnson hopes Tory MPs will back his plans to fix social services in England on Wednesday.
The Prime Minister reneged on his election promise by increase national insurance contributions to deal with the NHS backlog accumulated during Covid and to implement a long overdue reform of the welfare system in England.
What has Boris Johnson announced?
A UK-wide levy of 1.25% on health and social care based on National Insurance (NI) contributions will be introduced, earmarked for health and social care.
It will also apply to people working above the state Pension age.
The UK government will increase dividend tax rates by 1.25% to help fund the program.
Boris Johnson said the state should target its aid to protect people from the “catastrophic fear of losing everything to pay for the cost of their care,” adding, “This is what this government will do.”
How will the changes keep costs low?
Currently, anyone in England with assets over £ 23,250 must pay for their care in full.
As of October 2023, people starting adult welfare in England will pay no more than £ 86,000 for their own care in their lifetime.
Those with assets of less than £ 20,000 will not have to make any contribution towards their care from their savings or the value of their home. People with between £ 20,000 and £ 100,000 will be eligible for means-tested assistance.
How will the increase in national insurance affect my payslip?
The additional contributions will be indicated on the payslips.
A typical base rate taxpayer earning £ 24,100 will contribute around £ 180 in 2022-2023, while a typical higher rate taxpayer earning £ 67,100 will contribute £ 715.
A person with a salary of £ 50,000, on the other hand, could pay just over £ 500 more in annual contributions to NI next year, while an employee with £ 20,000 could pay an additional £ 130.
A worker with £ 100,000 could see their contributions increase by over £ 1,000 next year while a worker with £ 30,000 could see their contributions increase by around £ 250.
Who will not have to pay extra?
The government has said the progressive nature of the tax means 6.2 million people earning less than a threshold of £ 9,568 in 2021-2022 will not pay the tax.