The new health and social tax is very likely to rise in the future, experts call it a valuable “tap” that could also be levied on rental income, pensions and investment income.
Nimesh Shah, CEO of tax specialist Blick Rothenberg, has warned that the wording of the levy suggests that the government plans to increase the rate and / or expand its remit to tax other types of income or profits in the future.
“This new tax is here to stay and ripe for increase and abatement,” he says. “No government is going to abolish this tax and it will be a valuable tool to open the tap if more tax revenue is needed in the future.”
Prior to the announcement, estimates put the cost of “repairing” social welfare at around £ 10 billion, but the amount the government has committed to invest is half that.
Social workers take a cut to help fund the NHS raise
“Health and social security contributions are an effective and immediate solution to support the NHS after the pandemic, but raising taxes for upcoming governments is becoming a dangerous and permanent feature,” warns Mr Shah. “It is questionable whether future increases in health and social contributions will actually flow into social welfare.”
When the 1.25 percent increase in Social Security kicks in, someone earning £ 20,000 will pay £ 130 more to the tax officer, someone with £ 40,000 will transfer an additional £ 380 and someone who earns £ 100,000 will pay an additional £ 1,130.
If the tax were to rise to two per cent, which Mr Shah believes it will when or if the Conservatives are re-elected under a new parliament, those earning £ 20,000 would receive an additional £ 78.24 from their wages Strike out takeaway, while those making £ 100,000 would lose an additional £ 678.24 a year in dues.
Because the tax is levied on all workers who earn more than £ 9,568 a year, it will also affect those who work in health and social services.