follow us on twitter @elitebizmag find us on facebook connect with us on linkedin 

Boris Johnson breaks manifesto vow to announce National Insurance tax rise

Written by Latifa Yedroudj on Wednesday, 08 September 2021. Posted in Politics, Analysis

National Insurance contributions will increase by 1.25 per cent from April 2022

Boris Johnson breaks manifesto vow to announce National Insurance tax rise

National Insurance contributions will increase by 1.25 per cent from April 2022 

Boris Johnson has broken his manifesto pledge unveiling plans to overhaul UK’s social care system and boost the NHS. The Prime Minister announced a 1.25% rise in National Insurance to address the funding crisis with aims to reform the country’s health and social care system.  

The government announced plans to introduce a new Health and Social Care levy from April 2022, which will see a hike in National Insurance contributions by 1.25 per cent. Mr Johnson is also increasing an existing tax on dividend payments to ensure that people who receive their income through dividends also contribute more to the cost of social care and running the NHS. The Prime Minister said the plan would relieve people of the fear of “financial ruin” from “catastrophic” care costs. “Everyone knows in their bones that after everything we have spent to protect people through that crisis, we cannot now shirk the challenge of putting the NHS back on its feet,” Mr Johnson told Downing Street. The funds will be allocated to the NHS in the first three years, expected to amount up to £36 billion, to help health services deal with the backlog of treatments caused by the pandemic including NHS checks, scans and operations as well as to help the health service focus on innovation. 

The levy will generate an extra £12 billion a year for the Treasury and will be paid by all working adults including those who are over the state pension age. A typical basic rate taxpayer earning £24,100 will contribute an extra £180 a year, approximately £3.46 per week. A typical higher rate taxpayer earning £67,100 will contribute an additional £715 a year. A worker who earns £30,000 a year will have to hand over an extra £255 while a worker who earns £50,000 will have to pay an additional £505. Meanwhile, high earners with a salary of £100,000 will have to pay an extra £1,130. Mr Johnson’s announcement has been met with backlash, breaking his guarantee in his 2019 Tory manifesto not to raise taxes. Mr Johnson insisted National Insurance must be increased, adding that it would be “irresponsible” to raise funds via “higher borrowing and higher debt”. The government has also said that from October 2023 there will be an £86,000 cap, the maximum anyone will have to pay for their social care regardless of their assets. The Treasury will cover the full cost of care for those with assets under £20,000, while those with assets between £20,000 and £100,000 will contribute to the cost of care. 

Some business owners are displeased at the rise in taxes, with many firms struggling to get back on their two feet after the economy took a massive hit during the pandemic. Alan Thomas, UK CEO at Simply Business, one of the UK’s largest providers of small business insurance, said: “The National Insurance rise will have a significant impact on the UK’s small business owners and sole traders, and comes at a time when many have only just started their recovery from the worst of the pandemic. 

“Few have been hit harder by Covid-19 than the self-employed, with small businesses losing over £22,000 each on average. With over six million small businesses in the UK – contributing trillions of pounds a year in turnover – it is crucial to our collective recovery that they bounce back. 

“The National Insurance rise is the latest in a long line of setbacks, as self-employed people look to revive their livelihoods. We understand it’s incredibly important that the government addresses the social care crisis, but we urge the Prime Minister to do this without placing another hurdle in front of the small business owners and self-employed people who have been so heavily impacted by the pandemic.”

About the Author

Latifa Yedroudj

Latifa Yedroudj

Latifa Yedroudj has joined the Elite team to fully immerse herself in the business side of journalism, a strong passion of hers cultivated from young having co-run her mother's start up business since she was 18. Her interests lie in a wide range of subjects, including start ups, business, travel, and anything entrepreneurial she can get her hands on. She has worked for some of the biggest names in journalism including The Guardian and The Mirror. Follow her on @latifayed on Twitter for her latest journo rants.

Our Partners

Event Media Partners