How levy will help families with cost of care

Around one in seven adults aged 65 face lifetime care costs of more than £100,000, it has been estimated.

Here is a look at how the health and social care levy announced yesterday will help to protect families from catastrophic care costs – as well as what it will mean for workers’ payslips.

The UK-wide 1.25% health and social care levy based on National Insurance contributions will be ringfenced for health and social care.

It will also apply to people working beyond the state pension age.

Currently, anyone in England with assets of over £23,250 must pay for their care in full.

From October 2023, people starting adult social care in England will pay no more than £86,000 for their own care over their lifetime.

Those with assets under £20,000 will not have to make any contribution for their care. People with between £20,000 and £100,000 will be eligible for some meanstested support.

According to Treasury modelling, in 2022-23, more than a third of the overall tax increases and more than half the increase in dividend tax rates will come from the top 10% of households, with the majority coming from the top 20% of households.

Treasury documents say lower-income households will be large net beneficiaries, with the poorest households gaining most as a proportion of income.

The additional contributions will be shown on payslips.

However, many workers have already suffered pay cuts, wage freezes and job losses during the pandemic.

Rises in living costs are also affecting households, with the Consumer Prices Index (CPI) measure of inflation up by 2% annually in July.