Boris Johnson made his announcement yesterday of the additional National Insurance levy to be paid to help the NHS and fund Social Care and in addition added 1.25% to the rate of dividend tax payable.
Leaks from Whitehall centred around the intended increase in National Insurance that will take effect from April 2022 and how it broke the Government manifesto promise of no tax nor national insurance increases during the term of this Government.
The exact details of how the increment will be applied between employers, employees and self-employed is yet to be published.
What was below the radar was the intended increase in the rate of dividend tax, again from April 2022. The previous 7.5% for basic rate tax payers will increase to 8.75% , with higher rate increasing from 32.5% to 33.75% and upper rate increasing from 38.1% to 39.35%.
Hopefully, the additional monies generated will alleviate the backlog of consultations and operations and go a long way to improving your working environment. Similarly, for social care any additional money is badly needed.
Although much was publicised about breaking the manifesto promise everyone was acutely aware that money was needed to be found to help the NHS and Social Care to recover from the pandemic.
On 27 October 2021 Rishi Sunak will give his half yearly budget update and no doubt further leaks will surface prior to any announcement.
The main contents of the Budget, like most ministerial announcements these days, were leaked well in advance of yesterday’s announcement by the Chancellor, Rishi Sunak. He continues with his well-publicised aim to keep to the government manifesto promises and set the UK back on track to reduce its indebtedness arising from the pandemic.
Below is a summary of the main points that we understand will impact you.
The Coronavirus Job Retention Scheme - Extended
The Furlough Scheme has been extended until 30 September 2021 and the level of grant available to employers under the scheme will remain the same until 30 June 2021.
From July 2021, the Government contribution will reduce to 70% dropping down to 60% in August 2021.
To be eligible for the grant employers must continue to pay their furloughed employees at least 80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough.
Income Tax Thresholds
The personal allowance will increase to £12,570 and remain frozen at this level through to the end of 2026. The basic rate tax threshold will increase to £37,700 and will also remain frozen at this level through to 2026.
Different rates and allowances apply to Scotland and can be found here