PM announces 1.25% National Insurance increase to fund health and social care

The Prime Minister has announced a 1.25% National Insurance increase to fund the health and social care system, after it has been hit hard by Covid over the past 18 months.


The National Insurance increase will take effect from April 2022. Employees, companies, and freelancers will pay the new 1.25% tax, which will be used to fund the health and social care sector.

The new tax will be based on National Insurance contributions and will be legislatively separate from 2023.

Rates of dividend tax will also increase by 1.25% as the Prime Minister confirmed the government “will be asking better off business owners and investors to make a fair contribution too”.

When asked about the decision to increase National Insurance contributions and not Income Tax or Capital Gains Tax, the PM stated “Income tax isn’t paid by businesses so the whole burden would fall on individuals, roughly doubling the amount the basic taxpayer could come to expect, and the total revenue from Capital Gains Tax amounts to less than £9bn this year”.

Over the next three years, the new tax is expected to raise an estimated £36bn for health and social care. The majority of the funds raised will reportedly go towards dealing with the NHS backlog, which is at an all-time high.


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Emily Dodds

Emily Dodds

Marketing and Business Development Officer

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