ANALYSIS: Health and social care levy could leave workers facing £4,662 national insurance bill

For immediate release

New analysis from the TaxPayers’ Alliance (TPA) has laid bare the unfair impact of the new health and social care levy, with workers seeing a total national insurance bill of more than seven times that of the retired, at £4,662. This includes the contribution from both workers and their employers, including the new levy. 

Research based on ONS data shows that the bill for the retired, who face on average £596 per year in employee and employer national insurance contributions, will be dwarfed by the £4,662 contribution of the non-retired. This could see around 1,077,435 older people in work contribute more to the levy than those of the same age who have retired. 

The distributional analysis also estimates that the levy will result in poorer workers paying a higher proportion of their income in national insurance. For poorer non-retired households, national insurance would rise from 7.22 per cent to 7.93 per cent of their gross income, compared to richer ones who would see a rise from 4.72 per cent to 5.21 per cent. This is because national insurance is a regressive tax, which hits the poorest hardest.           

The campaign group have opposed the new hike, calling for a fairer and more sustainable solution for fixing social care than forever ramping up national insurance rates.

READ THE BRIEFING NOTE HERE

Overview:

• HM Government is planning to raise national insurance contributions (NICs) from April 2022 by 1.25 percentage points for employee, employer and self-employed national insurance. The purpose is two-fold: to meet demand for NHS backlogs (created because of covid-19) and for the provision of social care.
  
  
• In 2021-22, NICs are forecast to raise £147 billion, an increase of £2 billion from 2020-21. They are set to rise another £6 billion to £153 billion in 2022-23 (before the NICs increase was announced).
  
  
• The poorest 10 per cent of households already pay 57 per cent of their gross income in taxes compared to 39 per cent for the richest 10 per cent and 36 per cent for all households.
  
  
• With the proposed rise in NICs, non-retired individuals will have a national insurance bill more than 7 times greater than retired individuals (£4,662 against £596).

READ THE BRIEFING NOTE HERE

John O’Connell, chief executive of the TaxPayers' Alliance, said:

"Working taxpayers will take a drubbing from this disproportionate Tory tax hike. 

“Despite claiming to share the burden, national insurance hits low paid workers and struggling employers hardest. This levy lays the groundwork for more demands for cash after the next election, without sustainably sorting social care.

“Time will tell whether Boris ends up breaking another promise, and raises taxes on working people again without properly fixing the social care system.”

TPA spokespeople are available for live and pre-recorded broadcast interviews via 07795 084 113 (no texts)

Media contact:

Harry Fone
Grassroots Campaign Manager, TaxPayers' Alliance
[email protected]
24-hour media hotline: 07795 084 113 (no texts)

Notes to editors:

1. Founded in 2004 by Matthew Elliott and Andrew Allum, the TaxPayers' Alliance (TPA) campaigns to reform taxes and public services, cut waste and speak up for British taxpayers. Find out more at www.taxpayersalliance.com.
   
   
2. TaxPayers' Alliance's advisory council.
   
   
3. The TaxPayers’ Alliance found that accelerated automation in social care could save £5.9 billion annually.
   
   
4. Research by the TaxPayers’ Alliance identified 1,034 tax rises under Conservative prime ministers since 2010.