As Parliament has just voted for the Government's proposed Health & Social Care Levy, I thought it may be a good idea to explain just what it is and how it may impact you ...
The Health & Social Care Levy will soon become law meaning an increase of 1.25% on National Insurance costs!
The Government says that it will raise over £12 billion a year and is designed to tackle the massive backlog in the NHS caused by the pandemic. It will also help improve social care across the country.
"I'm not going into the politics behind the new levy, so don't panic!"
There will be a 1.25% increase in National Insurance from April 2022. This will be paid by both employers and workers via PAYE. After that, it will become a separate tax shown on a payslip from 2023 and calculated the same way as National Insurance.
All working adults will have to pay this, including older workers, and the money raised will be ring-fenced purely for the NHS and for social care. There will also be a 1.25% tax rate increase on income from share dividends, so pretty much everyone is covered.
The levy will focus on funding NHS and social care in England, but it also means the devolved nations will also get a spending increase of over £2 billion between them for their own services.
A portion of taxes raised by the Health & Social Care Levy will go toward a reformed social care system. This means a cap introduced on care costs in England of £86,000 over the entire lifetime of a person, and anyone with assets of less than £20,000 will be fully covered by the state.
The Government's premise is that everyone contributes according to their means, and they believe that you can't get rid of the backlogs without better funding for the NHS. They also say that you can't 'fix' the NHS without sorting out social care at the same time.
Whether you support this legislation or not, the Health & Social Care Levy will soon become law. Fingers crossed it works the way they believe it will.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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