What is the Health and Social Care Levy? Prime Minister unveils new tax on workers

Boris Johnson has announced a new tax on workers in his latest statement to the House of Commons.

The Prime Minister told MPs that he planned to introduce a Health and Social Care Levy on the pay packets of employees and employers.

It will, however, be some time before the changes are brought in, with some parliamentarians unhappy about the move suggesting there are other ways to finance services.

Let’s unravel exactly what the move will mean, by answering, what is the Health and Social Care Levy? How much will the new levy raise? How much will it cost me? Here are the answers.

What is the Health and Social Care Levy?

The Health and Social Care Levy is a new UK-wide tax being introduced to help pay for the NHS and social care in England.

It will appear as its own tax on payslips given to employees in 2023, but will effectively be commenced from April 2022 as part of National Insurance contributions.

It’s important to say that National Insurance and the Health and Social Care Levy are two UK-wide taxes, while matters around health and social care are largely devolved.

While people living in the devolved nations will see their National Insurance contributions rise next year, the Government has said those countries will see extra money, so as not to be seen as taxing people in Wales, Scotland and Northern Ireland for England’s health and social care systems.

How much will the Health and Social Care Levy raise?

The Government is expecting to receive tax receipts of £12 billion each year from the introduction of the Health and Social Care Levy.

That means over the course of three years, it is expected the Treasury will get £36 billion from the added tax.

The money will go towards the health service and social care, which it will exclusively be used for.

How much will the Health and Social Care Levy cost me?

If you’re aged 16 and over and not of retirement age and you earn £184 a week, you will have to pay the new Health and Social Care Levy.

Those on £20,000 will see their contributions rise by £130, those on £30,000 will see a rise of £255, and those on £50,000 can expect to pay an extra £505.

For those earning even bigger salaries, those earning £80,000 will pay an additional £880, while those earning £100,000 will pay £1,130.

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