A busy start to the first week back in Parliament following summer recess, with the announcement that we are taking action to fix social care & support the NHS. The extra funding for the NHS will help tackle the Covid backlog & the changes in social care will deliver a fairer deal for those needing care.
The decision to raise taxes was not taken lightly. Colleagues at the Treasury viewed this measure as a difficult but necessary one. However, it will mean we can face the challenges facing health and social care in the UK following the coronavirus pandemic.
The HSCL is ringfenced for health social care, and will be effectively introduced from April 2022 when NICs for working age employees, self-employed, and employers will increase by 1.25 per cent. The Levy will be legislatively separated from 2023 when NICs rates will return to 2021-22 levels. Dividend tax rates will also be increased by 1.25 per cent to fund the Plan for Health and Social Care.
It is worth noting that that there are some exemptions to the Levy, which is applied at a flat rate of 1.25 per cent. People earning less than the Primary Threshold / Lower Profits Limit in 2021-22 will not pay the Levy, and the Levy will not apply to Class 2 or 3 NICs.
This means that the highest 14 per cent of earners will be paying around half the revenues of the Levy, and that no-one earning less than £9,568 will pay a penny.
Health and social care is fundamental to all of us. The announced plan and HSCL to fund it will put the NHS on a sustainable footing as it tackles the Covid backlog and recovers from the pandemic as well as delivering an affordable solution to social care.