New tax to pay for health and social care

The government has proposed a new UK-wide 1.25% health and social care levy ringfenced for health and social care to take effect from April 2022. Initially National Insurance contributions for working age employees self-employed and employers will increase by 1.25% and be added to the existing NHS allocation. Class 2 and class 3 contributions will remain unchanged. From April 2023 once HMRC’s systems are updated the levy will become a separate tax and will also apply to all working adults including those over the state pension. National Insurance rates will then return to their 2021-22 levels.

The rates of dividend tax will also increase by 1.25% to help fund the package. The new rates will be: 8.75% (basic rate) 33.75% (higher rate) and 39.35% (additional rate). Shares held in individual savings accounts (ISAs) will continue to be free...