Taxing Times: Boris Johnson Announces Substantial Reforms​

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By Curtley Bale​


The Story

This week, UK Prime Minister Boris Johnson announced a rise in UK National Insurance, a tax increase that has been said to take the UK tax burden to the highest level since 1950. The tax increases are intended to help fund the NHS, reducing the backlog of patients that has been caused by the pandemic.

National Insurance Contributions (NICs) are paid by employees based on their wages; employers based on contributions per employee; and the self-employed based on their profits. The plan is to increase the current levels of NICs by 1.25% in order to raise £12 billion for funding health and social care, as part of the Conservative party’s long-term vision to spend £25 billion on the NHS over the next three years.

What It Means For Businesses and Law Firms

Estimates suggest that 29 million people will be hit by the tax hike, and a similar 1.25% increase in the tax on dividends will see the shareholders of limited companies earning less after-tax too.

The key selling point of Johnson’s £12 billion plan is the survival of the NHS. Without extra funding, the Health Secretary has said that the current 5.5 million-person waiting list could more than double to 13 million (BBC).

The government's proposals will also lead to a change in the social care system. For example, it will give proportional help in the payment of care for those with assets valued between £20,000 and £100,000, whilst anyone with assets below £20,000 will have their social care covered entirely by the state (Sky News).