Financial pressures on many households and businesses in the UK have intensified today, as national insurance rates are being lifted to raise funds for the NHS and social care. Despite the cost-of-living crisis, the government has pushed through its manifesto, which toppled the rise in national security by 1.25 percentage points, announced last September. The move means that millions of employees will start paying higher contributions to National Insurance from today, the start of the new tax year. Businesses will also see their contributions increase, at a time when they are already facing rising costs. Dividend income tax rates are also up 1.25 percentage points. Business groups, unions and some Conservative MPs had pushed the government to delay growth, given the financial pressures on employees and companies. The “Health and Social Care Entry” is expected to raise about 12 12 billion a year to tackle the NHS pandemic, as well as to reform routine services. Today’s changes mean that those earning more than 9. 9,880 will now be liable for 13.25% NI contributions, up from 12%. Profits over .2 50,270 will be charged at an interest rate of 3.25%, from 2%. However, from July, national insurance will only be charged for gains in excess of 12 12,570, as Chancellor Rishi Sunak announced a 3. 3,000 increase to the NI threshold in last month’s spring statement. This will deduct a total of about two million employees from direct tax (if they earn less than 12 12,570 a year). According to the Resolution Foundation, anyone earning less than 32 32,000 a year will be better off combining these two policies by July. Changes in UK national insurance Photo: Resolution Foundation However, there are other changes starting for the new tax year, including the freezing of income tax limits. This will entice more people to pay taxes or more taxes if their wages increase in the coming years. This will make it harder for households to cope with rising costs, such as rising energy bills last week. Resolution Foundation (@resfoundation) April 2022 will see the cost-of-living crisis in the UK intensify as energy prices soar by more than half overnight, pushing 5 million English households into fuel anxiety, even taking into account recently announced support measures the Chancellor: pic.twitter.com/6O4gOARCCp April 5, 2022 Prime Minister Boris Johnson defended National Insurance increases, saying the health service needed extra resources: We need to be there for our NHS the same way it is there for us. Covid has led the longest waiting lists we have ever seen, so we will deliver millions more scans, controls and features to the largest coverage program in NHS history. We know this will not be a quick fix and we know we can not fix waiting lists without fixing social care. Our reforms will put an end once and for all to the tough lottery of spiraling and unpredictable care costs and bring the NHS and social care closer together. The contribution is the necessary, fair and responsible next step, providing our health and care system with the long-term funding it needs as we recover from the pandemic. The government says the levy means:
From today, the health and social care contribution will start raising billions to tackle Covid’s outstanding issues and reform routine services 39 billion over the next three years to put health and care services on a sustainable footing Levy will offer the largest coverage program in NHS history and end rising social care costs
THE AGENDA
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