Sunday Mirror (Northern Ireland)
It’s all change for money matters
How the new government policies will affect you The Government has announced two major policy changes that are likely to directly affect your finances.
One is the much-anticipated National Insurance rise, which will put an increased burden on workers and employers. The other is the suspension of the state pension triple lock, meaning pensioners will receive a more modest increase than anticipated.
Tax increase
Despite a clear commitment in their last election manifesto not to raise taxes, the Government has unveiled a 1.25% increase in National Insurance contributions from April 2022.
This is to raise additional revenue to fund health and social care.
This extra contribution will then become a “health and social care levy” from April 2023 and will appear as a separate deduction on payslips.
Alongside the National Insurance rise, Dividend Tax rates will rise by 1.25% from April 2022. This will mostly affect investors and business owners.
And in another radical reform, around one million working pensioners will pay National Insurance contributions on earnings from 2023.
Under the current system, taxpayers stop making
National Insurance contributions when they turn 66 – at which point the state pension currently kicks in. This will be the first time a government has asked pensioners to pay more, with contributions starting at a rate of 1.25% in April 2023.
‘‘ No one will be asked to pay more than £86,000 for care in their lifetime
Social care changes
Currently, in England, if people have assets worth more than £23,250, they must pay for their social care and there is no cap on the costs.
But under the new system, anyone with assets below £20,000 will not have to pay anything towards their care from what they own, but may have to make contributions from their income.
Those with assets from £20,000 to £100,000 and above will have to contribute on a sliding scale. This will depend on contributions from local authorities.
People in this bracket will not contribute more than 20% of their assets each year. While those with assets above the £100,000 threshold must meet all fees until the value of their assets fall below this amount.
Boris Johnson has also announced a lifetime social care cap of £86,000 from October 2023, meaning no individual will be asked to pay more than this sum for care in their lifetime.
Triple lock’s broken
In a move designed to save the Government around £8billion a year,, work and pensions secretary Thérèse Coffey broke a second manifesto commitment by announcing that she was suspending the state pension triple lock for one year.
She told the House of Commons that sticking to the triple lock – which promises that the state pension will rise by the highest rate of inflation, earnings, or 2.5% – would be unfair, given that prices are increasing at a rate of well over 8% a year.
Tax rises were expected – but perhaps not this soon.
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