This social care package will be funded through a new UK-wide health and social care levy, which is expected to raise around £12 billion a year.
The levy will apply to employers, employees, and the self-employed from April 2022, followed by people who work beyond their state pension age from April 2023. The main (12%) and higher (+2%) rates of Class 1 NICs which apply to employees will increase to 13.25% and 3.25%
respectively from 2022/23.
At the same time, the employers’ Class 1 NICs rate will rise from 13.8% to 15.05%, while the self-employed Class 4 NICs main (9%) and higher (+2%) rates will go up to 10.25% and
The increase will not apply to Class 2 NICs – the flat rate paid by the self-employed with profits above the small-profits threshold, which is currently £6,515 a year in 2021/22 – or Class 3 NICs voluntary contributions. Directors and shareholders who receive dividends from a company’s profits will pay their share as well, with the three tax rates being unchanged since 2010/11.
For 2022/23, the basic rate of dividend tax increases to 8.75% (up from 7.5%), the higher rate rises to 33.75% (up from 32.5%) and the additional rate is 39.35% (up from 38.1%).
From October 2023, anyone with assets under £20,000 will have their care costs fully covered by the state, while those with between £20,000 and £100,000 will receive state support.
There will also be a cap of £86,000 on what people will be asked to pay over their lifetime for care, regardless of what assets they might or might not own.