The government’s plans for an extra tax to deliver a long-overdue boost to social care and to help clear the NHS backlog caused by the pandemic have been passed by the Commons.
Employers, employees and the self-employed will all initially pay an additional 1.25% in National Insurance Contributions (NICs) from April 2022. National Insurance will then return to its original rate the following year and the extra tax will be collected in the form of a Health and Social Care Levy.
The Prime Minister is breaching a key commitment in his 2019 Conservative manifesto not to increase taxes in order to generate an estimated £12 billion a year for health and social care.
Sharing the Load
At Marmion Recruitment, we welcome the government’s intentions to deliver additional funding to social care. Like many other businesses, we have been grateful for the support of the furlough scheme, without which we may not have survived. We recognise that the government cannot pursue its pre-COVID economic strategy without considering the financial impact of the previous 18 months.
The care crisis that predates the pandemic requires vast sums of money to resolve and, given that taxes have paid the wages of millions of British workers for several months, there is a strong economic case for additional taxation. The National Insurance increase has been introduced because it is both simple, with the collection mechanisms already in place, and has the potential to be progressive; individuals who earn at higher levels pay more in terms of contribution.
We understand, however, that there are limitations to using National Insurance as the basis of the tax rise, of which the Treasury has taken important steps to address.
What Does the National Insurance Increase Mean for You?
Colliding with Brexit and the end of various COVID support schemes, the National Insurance increase comes at a challenging time for many.
National insurance contributions are essentially a tax on earnings and self-employed profits paid by employers, employees and the self-employed. Any increase will therefore account for a reduction in take home pay, whilst increasing wage bills. Recruitment of the right kind of people in an appropriate field of employment is therefore even more crucial, so that outgoings and returns work for everyone.
The NHS is an enormous source of pride for Britain, and we hope that the increase in National Insurance goes a long way towards creating a reformed and integrated system between health and social care that is focused on improving performance levels and patient outcomes.
As an employer of a relatively young team, we take the future health, well-being, and prospects of our people very seriously. Part of this responsibility is to ensure we do our bit to help fund the social care system and protect the NHS for many years to come.
As a values-based organisation, we realise that business is about much more than profit – it is, ultimately about the lives and future of the people who support and work hard to protect it. We are proud to do our bit to help ensure our staff have a bright, happy and healthy future ahead of them; put simply, paying our fair share of this NI / tax increase is the right thing to do!