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

People's Pension: Long-term thinking the only way to solve our pension savings problem

People's Pension: Long-term thinking the only way to solve our pension savings problem

Patrick Heath-Lay says the latest Pensions Commission report is a clear signal that further reform is needed

Patrick Heath-Lay
clock 22 May 2026 • 3 min read
Professional Pensions: Stories of the week

Professional Pensions: Stories of the week

Pensions Commission interim report, BlackRock launches LTAF and DWP gender pensions gap report

Professional Pensions
clock 22 May 2026 • 1 min read
Women in Pensions 2026: Entries close today!

Women in Pensions 2026: Entries close today!

Individuals and organisations nominated have until the end of today (22 May) to complete entries

Professional Pensions
clock 22 May 2026 • 1 min read
Trustpilot