National Insurance Payments Rise and Cap on Care Fees Introduced

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Prime Minister Boris Johnson has just issued a statement regarding the future of social care in England.

One of the main points in the statement which will affect the day to day lives of UK residents was that National Insurance deductions from employees and employers will be increased by 1.25% from April 2022.  Those over pension age who are still earning will now have to pay National Insurance deductions.

There will also be an increase in the tax on dividend payments of 1.25% at the same time.

The reason for the rise in National Insurance payments rather than increasing income tax or capital gains tax was given as these measures would not bring in enough money.

The devolved nations will seemingly receive a percentage of the monies received from the increase in National Insurance payments. This is due to the fact that health is a devolved matter and the increase in payments has been introduced to deal with the social care issues in England.

Changes are also to be made to the funding for residential care. 

From October 2023, no one starting care will pay more than £86,000 for their care and those with less than £20,000 in assets will not have to pay.  Those with assets valued between £20,000 and £100,000 will have to pay a reduced amount.

The Prime Minister stated that he would be working with the financial industry to look at insurance options for people to be able to pay for their care in the future if required.

This statement has been hailed by the UK Government as some of the biggest reforms in the history of the NHS.  So far, the initial statement has done nothing but state the bare minimum of details, just how this will affect both workers and those needing care, remains to be seen.

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