PM announces tax rises to fund social care

NI contribution and dividend tax increases will help fund NHS backlog and social care reform

Jonathan Stapleton
clock • 1 min read
Prime Minister Boris Johnson with Chancellor of the Exchequer Rishi Sunak. Picture by Andrew Parsons / No 10 Downing Street
Image:

Prime Minister Boris Johnson with Chancellor of the Exchequer Rishi Sunak. Picture by Andrew Parsons / No 10 Downing Street

Prime minister Boris Johnson has announced a 1.25% increase in national insurance contributions and dividend tax from April 2022.

The government said the national insurance rise will become a separate levy on earned income from 2023 - appearing as a separate health and social care levy on payslips.

It is expected the measures will raise about £36bn over the next three years, and will be mainly be used to deal with the NHS backlog in the early years.

From October 2023, however, no one starting care in England will be forced to spend more than £86,000 on care over their lifetime.

Anyone who has assets of less than £20,000 will have their care costs fully covered by the state and those with assets between £20,000 and £100,000 will receive some means-tested state support.

Commenting on the announcement, Just Group group communications director Stephen Lowe said today's announcement would help people make financial plans for care but warned the costs excluded ‘hotel costs'.

Lowe said: "A cap of £86,000 is only a start when considering the total costs people will be expected to bear because it excludes the ‘hotel' costs - such as accommodation and food. It could easily take perhaps three or four years and perhaps £200,000 to £400,000 of associated spending to reach the cap. So financial planning to avoid catastrophic loss of assets will continue to be a valuable service provided by financial advisers."

More on Industry

One third trust AI tools for pension guidance, says Scottish Widows

One third trust AI tools for pension guidance, says Scottish Widows

Provider says professional financial advice and AI insight can coexist

Alex Levy
clock 11 August 2026 • 2 min read
News Digest: Greens admit they are powerless to implement Israel pension fund divestment pledge

News Digest: Greens admit they are powerless to implement Israel pension fund divestment pledge

PP brings together all the latest news on pensions from across the national and financial media

Professional Pensions
clock 11 August 2026 • 1 min read
Buzz: Should the chancellor rule out changes to pension lump sums?

Buzz: Should the chancellor rule out changes to pension lump sums?

Autumn Budget, pensions dashboards and artificial intelligence

Professional Pensions
clock 10 August 2026 • 1 min read
Trustpilot