Social Care Reform

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Social Care Reform

Yesterday, PM Boris Johnson made an announcement introducing his big plans to reform the social care system.

Rise in National Insurance

In April 2022 National Insurance contributions will increase by 1.25%. This increase will help to generate £36 billion in funds over 3 years.

These funds are to be spent as follows;

  • NHS funding – £16 billion
  • COVID health response – £8.9 billion
  • Social care & training – £5.4 billion
  • Devolved nations health and social care – £5.7 billion

The money that is going to the COVID health response is to help clear the 5.5 million long waiting list for people awaiting surgery.

What does the NI increase mean for you?

Annual Salary

Current NIC

NIC after 1.25% increase Increase in annual NIC NIC as a % of income (after increase)
£20,000 1,252 1,382 £130 6.91%
£30,000 2,452 2,707 £255 9.02%
£40,000 3,652 4,032 £380 10.08%
£50,000 4,852 5,357 £505 10.71%
£60,000 5,079 5,709 £630 9.52%
£70,000 5,279 6,034 £755 8.62%
£80,000 5,479 6,359 £880 7.95%
£100,000 5,879 7,009 £1,130 7.01%
£130,000 6,479 7,984 £1,505 6.14%

 

The table shows how much you can expect to start paying in NI from next year. Source: The guardian

Social care changes

The amount that people will need to earn before needing to pay for their own social care is going to be reduced to £20,000 in October 2023. For those with an income between £20,000 and £100,000 will receive some state help towards the cost of social care.

There will be a cap on spending on the cost of care at £86,000.

Rise in dividend tax

Boris also announced that there would be a rise in dividend tax by 1.25% at the same time. After a hard year for business owners, this will seem to some as an extra kick in the teeth.

It is important that you discuss with your accountant the most tax efficient way to pay yourself as a director from April 2022.

Big Hand is here to help you with your financial needs. To get started, get in touch today on 0161 327 2911.

 

 

By |September 8th, 2021|Business tips|0 Comments

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