Prime Minister breaks manifesto pledge by raising National Insurance Contributions (NICs) and dividend tax by 1.25 per cent
Boris Johnson is facing significant backlash from ministers, government aides and MPs, including senior Conservatives, after announcing a 1.25 per cent increase in National Insurance Contributions (NICs) and dividend tax to fund health and social care reform.
Unveiled in Parliament today, the reforms will be introduced in April 2022 and, according to the Prime Minister, will raise £36bn for frontline services in the next three years as the government looks to achieve the “biggest catch-up programme in the NHS’ history.”
Prior to the announcement, the speculated proposals had been privately described by senior figures as “idiotic” and “morally, economically and politically wrong.”
MPs had already said that any increases would not only break the party’s pledge in the 2019 election not to raise taxes, but would see younger workers subsidising care for older people.
In response, the Prime Minister told the House of Commons: “I accept this breaks a manifesto commitment. It is not something I do lightly but a global pandemic wasn’t in anyone’s manifesto.
“This is the right, the reasonable, and the fair approach. I think the people of this country understand that in their bones and they can see the enormous steps that this government and the Treasury have taken.”
National Insurance hike to impact low earners and sole traders
Experts and MPs, including the Labour leader Keir Starmer, warned that a hike in NICs would “hit businesses”, particularly low earners, sole traders and young people. Starmer described the move as “sticking [a] plaster” over the problem.
Currently, sole traders pay nine per cent NICs on profits between £9,568 and £50,270 and two per cent on anything above that. This will rise to 10.25% and 3.25% respectively.
Freelancers and contractors hit by another dividend tax rise
After freelancers and contractors experienced major reform to dividend taxation in 2016, Boris Johnson also revealed a 1.25% increase in tax due on dividends.
It means from April 2022, basic rate income taxpayers will pay 8.75 per cent on dividends (up from 7.5%), higher rate taxpayers must pay 33.75% (up from 32.5%) and additional rate taxpayers will be taxed at 39.35% (up from 38.1%).
Commenting on the changes, Andy Chamberlain, Director of Policy at IPSE, said: “After the financial damage of the pandemic, exclusion from support and the changes to IR35 taxation, this new tax hike on dividends will make it almost impossible for freelancers to continue to work through a limited company.
“To limited company directors – from project managers to graphic designers – this is salt in a year of wounds.”
Smallest business hit hardest by tax reform ‘once again’
Qdos CEO, Seb Maley echoed Chamberlain’s thoughts, adding: “Raising NICs and dividend tax is a move that directly impacts millions of people working for themselves – people who have arguably been hit the hardest by the pandemic.
“Once again, it seems that the smallest businesses are bearing the brunt of tax reform. Yet still, it will be the flexibility, dynamism and skills of the independent workforce that the government needs most to speed up the economic recovery.”
No-one can be surprised by this – they have been handing money hand over fist to their mates for over a year and now we all have to pay.
Bojo is a liar and he and his cabinet are useful (useless ?) Idiots.
Bet they get in next time as well by fronting someone just as bad.
They will not stop until they have ground the country into dust whilst they laugh all the way to the bank.
Yes, how anyone is still taking this lying sack of sh*t PM’s promises seriously is beyond me.
World leaders from Biden to the Taliban have got his number. Domestically he has a history of telling people what they want to hear just to get elected, then screwing them over almost immediately. That includes us, for we voted for him and his “oven ready deal”.
Once in power he can’t do policy so he just does dressing up for photo opportunities. A government based on leading the daily news cycle instead of planning and doing.
At last we have a PM who can grasp a nettle
We with have free NHS or paid for private health
It has to be paid from somewhere or do people think money grows on trees?
At least we have a government who accepts there are challenges that need to be solved not swept under the carpet any longer
£600m a week Brexit bonus for the NHS – Boris Johnson, 2018
Share tax pain to solve NHS crisis – Boris Johnson, 2021
Nothing about the meticulous planning required to put it to good use. The 700 page document for that is no doubt being hurriedly drawn up with only the press release chapter on slogans complete and some glossy pictures of new hospitals, actually built in the seventies.
You’ve been conned, mate, and you know it. It’s ok if you feel ashamed now.
C Sense – “At least we have a government who accepts there are challenges”
I think you’ll find your incompetent, corrupt government caused all those challenges then lied to you about who would be paying for the clear up.
Like con artists returning to known suckers for another payday.
Privatiser it then, I can’t even get eye surgery because of the Covid backlog but yet I get paid taxed like a fool because of Covid and all those living life on full furlough who are complaining about their Mexico summer holidays and getting their house extensions whilst I pay £950 a month of rent as a self employed because house prices have gone up so much. I saw a lovely elderly lady on channel 4 news yesterday who said she thinks what the tories is doing is good and said young people can’t get everything for free. Name one thing I get for free, I didn’t even get free school dinners and I spent nights on street as my mother suffered mental health issue, what happened to fairness? Still the self employed graft and work really hard to be hit by a new ni and now an increased dividend tax. If another country opened up with a reasonable opportunity before the next lockdown I’d leave for good. I’d die hear working to the bone before I meet the new probable pension age of 95 when it’s my time. But get this, I don’t claim benefits, I live off the mortgage deposit that I have been saving for years and I still support my mother financially as she is she missed her pension because the tories increased it.
Never have and never will vote for a Tory government.
Massive sympathy for everything you say here.
What we had wasn’t perfect but ruined very quickly by bad and corrupt policy. Health ministers unprepared for illness, education ministers who can’t or won’t foresee the start of term. Money siphoned out of the system until breaking point. It didn’t need to be like this, we could have had adequate healthcare, social care and education. But we decided to chuck our national coffers into a sea of sharks instead.
Society is splitting into haves and have nots, workers and owners. And the workers are picking up the bill.
We’re not paying for the NHS as a service, we’re paying for it to continue functioning as a money pit for private equity and pharma.
@C Sense – where do you think decades of Naional Insurance contrributions have been spent then ? Certainly not on direct care to the masses – to add, the older people who have had to pay for their own case is a moral outrage. These are people who have likely contributed 50 years plus of NI yet now its a bit hard, not fixable and expensive, have to fund their own care. £1000 a week is a disgrace – the result of privatisation / out sourcing. When my time comes, I will be off to Dignitas after spending all my money rather than end my days this way.
@C Sense fell for the slight of hand again.
Note the deliberate use of ‘social care’ with no mention of ‘residential care’.
That little extra will still cost you your house.
How about making the tax dodging companies (Google, Amazon etc.) pay their fair share of tax ? Oh wait , we are all lower hanging fruit and easy targets.
Lucky I shut my company down already. It’s obvious there’s no place for small business in Brexit Britain under these fraudsters.
Yes, the £350M pw extra for NHS was a lie, but at least:
We’ve eliminated all that red tape
Sorted out Northern Ireland
Abolished illegal immigration
Got a trade deal with US
Enjoyed an economic miracle
In fact, our deal is so good the EU is begging us to change it.
@Gordon Bennet. I am not sure if you are being sarcastic or not because the outcome of Brexit includes:
– the loss of free trade in the closest largest market to our island
– island of Ireland border issue is not resolved permanently-
– illegal immigration has not slowed down at all, especially acorss the channel (btw, we were always able to control immigration, we just chose not to)
– financial services are no longer able to passport their services into the EU
– EU based british pensions holders can no longer transfer their pensions due to not being able to get FCA approved financial advice
– employment protection for the masses in the UK is heading for the bin if its not already there
– reduced access to food that we cannot produce ourselves (which is nearly everything)
– shortage of lorry drivers because of the constraints of employing anyone from the EU and them no longer having unfettered access to the UK – so no-one to deliver the goods we can actually get our hands on
– trade agreements with the US and Aus are at the expense of the green committments made by the Gov but don’t worry, you will make up the difference when you can no longer replace your Gas Boiler with another Gas Boiler, buy the car you want without it costing so much more than it does today etc etc
– no employment in the EU without a visa
– no free movement in the EU
And if you think we are in the middle of an economical miracle, you are in for a bit of a shock……….
and thats before we look at:
-the loss of democracy as Bojo still has his special powers in place and it looks like he will get to keep them.
– the financial ruin of our country and the near insurmountable debt which the has been trousered by mates of the Gov that the general public will have to pay for rather than the big tech businesses no matter how much they talk about it.
and all for a well pr’d virus that will kill less than 1% of our population despite the Gov’s best efforts in letting it run riot in care homes and hospitals.
Is this the new triple lock?
Employers NI, employees NI and dividends tax.
Someone’s got to pay for all that support money I got as a Ltd company director during the pandemic I suppose.
And for those of us sadly inside IR35 … while Bojo said the NI burden will be shared between Employer and Employee, for those of us forced into working via Umbrellas by that other piece of sh1te tax legislation we will be taking on the whole NI uplift.
Is it time to bite the bullet and go Permy?
As a lot of employers are now finding out.
It’s time for contractors to down tools until the hostile environment is over.
Good luck with all those infrastructure projects!
I’m out. Handed in my notice and offline until April next year. Can’t stomach IR35 taxes @ approx 2/3 income stoppages
Help! There’s been a robbery, we’ve been mugged!
Instead of punishing Tax payers during pandemic, the government should have looked at inefficiency and wastage across all government departments. PPE scandals and pandemic liar loans have costed 10s of billions pounds to tax payers . People are taken for granted as nobody is accountable
Boris Johnson promised to ‘lie down in front of bulldozers’ to stop Heathrow expansion.
Only on Monday, he gave the green light for the new runway.
Breaking: UK betrays the Paris climate accord in the UK – Australia trade deal.
Importing low standard beef from the other side of the planet was never going to be environmentally friendly.
Johnson’s reputation as a liar being demonstrated daily just before hosting COP 26.
NI tax increase to raise £36bn – conveniently about the same amount they handed to their mates in Serco for the failed “test and trace” system (£37bn). This isn’t a tax rise to fund social care. It’s a tax rise to pay for the billions handed to their mates and dodgy companies.
If this was happening in third-world countries even by a few million, we’d call it corruption and bribery. Here, it’s to the tune of BILLIONS and we call it “social care”
French news reporting:
“PM Johnson in Britain has been forced to impose a very large tax increase for the UK to pay for the revenue losses of Brexit”
This government has already shafted contractors with the IR35 reform and now we all have to work under umbrella companies paying employee and employer NIC contributions we are get wacked again – this is not a fair way to pay for social care and it’s wrong to try and find the NHS this way as the fat cats in the NHS will cream hundreds of thousands if for their salaries and bonuses
Saw this coming years ago. DTAX will continue to rise. Covid, Brexit, and IR35 have destroyed contracting for the benefit of the consulting companies who fund the government.
I’m basically done with the UK, contracting is no longer viable
Looks like y’all got sold a monorail
https://en.wikipedia.org/wiki/Marge_vs._the_Monorail