The prime minister has confirmed that there will be a 1.25% increase to NIC and dividend tax rates.

National Insurance Increases

There will be a temporary increase in April 2022 of 1.25% to Class 1 and Class 4 NIC as well as a 1.25% increase in Class 1 Secondary NIC paid by employers. It will also apply to Class 1A and Class 1B Nic paid on benefits by employers. From April 2023 this will be separately legislated so that it is ringfenced specifically for health and social care. The changes from April 2022 will not affect those over the State Pension age. However, the changes from April 2023 will also apply to individuals working who are over the state pension age.

Dividend Tax Increases

The government has also announced a 1.25% increase in dividend tax rates that will apply from April 2022. The new rates will be:

Basic Rate 8.75%
Higher Rate 33.75%
Additional Rate 39.35%


There is no alteration to the £2,000 dividend allowance this will remain unchanged.

Cap to Care Home Fees

The government also intend to introduce a £86,000 cap on care fees. Currently to have residential care paid for by their local council, people in England must have savings and assets, which can include their home, worth less than £23,250. This cap would mean that the maximum amount an individual would need to fund themselves before care being paid for by the council would be limited to £86,000. This cap only covers the care element and not accommodation and food.