33/2021 Arun Advani, Helen Hughson, Andy Summers and Hannah Tarrant
The government has proposed a new 'Health and Social Care Levy' to take effect from April 2022, which would add 1.25p to all rates of National Insurance Contributions (NICs). Unlike NICs, this new Levy would also apply to dividends, and (from April 2023) to people of pension age.
The revenue will be ringfenced to fund health and social care. In this report, we argue that instead of adding this new Levy on top of existing NICs, the government should have taken the opportunity to fix the gaps in our current National Insurance system. Our alternative plan for reforming NICs would raise more revenue than the government's proposed Levy and would make our tax system fairer at the same time.