The controversial Health & Social Care Levy was passed by MPs last week. Many politicians are calling it the Care Tax, so it becomes a little more palatable for voters to swallow ...
Whether you believe it is a good thing or a bad thing, the Government has finally made a decision on more funding for the NHS with a large proportion of the Care Tax ringfenced for social care post-pandemic.
All rates of National Insurance Contributions (NIC) and Income Tax on Dividends now increase by 1.25 percent from the 6th of April 2022. It will be decoupled from standard NIC in 2023, which then allows the Government to expand its scope to include taxpayers over the age of the State Pension.
Older workers will pay the Health & Social Care Tax at 1.25% on any income over £9,568 per year. Employees don't usually pay class 1 NIC from State Pension age, although employers do pay secondary class 1 NIC unless there is an exemption such as ex-forces.
The upper earnings limit of £50,570 is now aligned with the Income Tax higher rate, and both of them are frozen until the 6th of April 2026, which was announced at Budget 2021. It is unclear if the primary threshold of £9,568 and the secondary threshold of £8,840 have also been frozen.
Anyone on the minimum wage of £8.91 per hour will pay class 1 NIC when they work for more than 17.4 hours a week, and Income Tax kicks in when they work more than 21.13 hours per week.
I'll keep you updated when I hear more.
If you'd like to find out more about anything I've written here, do call me on 01908 774323 or leave a comment below and let's see how I can help you.