National Insurance contributions to rise by 1.25% points from April 2022 to fund social care costs

[Deleted User]

Indeed. And as NI citizens are slowly finding out, he cares not a jot who becomes collateral damage. 

uknick

I'm struggling to see how the changes will help those who need social care and would like to leave some of their estate to their relatives.  (Whether they should be allowed to retain some is, I think, a separate moral discussion and has been covered many times here and elsewhere)

The extra taxes collected for the first 2 years go to the NHS which will be used for more immediate matters not social care, e.g. the backlog of operations/appointments (was it 5m at the last count?)  Or, according to a couple of press articles in the last day or so, highly paid diversity officers.

Then, in 2 years time the money raised will be voted to the Social Care Budget, some of which will be used to subsidise those that have the funds to pay for themselves.  However, only subsidised once they've spent £86k from their own pocket on their "personal" care alone, not "hotel" costs.  But, as hotel costs can be 3 times the personal care costs, going by what's been posted above, are you really going to see any change?

Is this just a load of hogwash to fund the COVID deficit without admitting it?

 

Jeremy535897

uknick said:

I'm struggling to see how the changes will help those who need social care and would like to leave some of their estate to their relatives.  (Whether they should be allowed to retain some is, I think, a separate moral discussion and has been covered many times here and elsewhere)

The extra taxes collected for the first 2 years go to the NHS which will be used for more immediate matters not social care, e.g. the backlog of operations/appointments (was it 5m at the last count?)  Or, according to a couple of press articles in the last day or so, highly paid diversity officers.

Then, in 2 years time the money raised will be voted to the Social Care Budget, some of which will be used to subsidise those that have the funds to pay for themselves.  However, only subsidised once they've spent £86k from their own pocket on their "personal" care alone, not "hotel" costs.  But, as hotel costs can be 3 times the personal care costs, going by what's been posted above, are you really going to see any change?

Is this just a load of hogwash to fund the COVID deficit without admitting it?

 

Care costs may be subsidised in part while the person needing care has between £20,000 and £100,000 of assets, so it may take a little longer to reach the £86,000 cap for them, but as the average house is worth over £250,000, most houses will still have to be sold to fund care. Add to that your point about most of the cost not being for "care" as such (and who will audit the split between "care" and "other"), and the fact that councils already reject a high proportion of applicants for assistance as not being ill enough, and I fear it is not actually going to help much at all.

LandOfConfusion

csgohan4 said:

  But oh no some people are complaining, I am entitled to this and I paid my taxes blah. 

From what I've seen the younger (pre-Boomer) generations are largely not complaining about inheritance but what they are complaining about is why they are being told to pay for the care of someone else who hasn't put the money in themselves. But perhaps I'm just biased in the places I go and the people I talk to, and to be honest I don't personally know that many Boomers outside of the Buy-To-Let arena so maybe that's it?

You're right though that people's money / other people's 'inheritance' should be spent on the social care of the current owner first and foremost. It's not right that potential inheritances should be protected at the expense of the rest of society but then again, look at who's arguing for that policy and look at who they vote for.

Johnson chooses to play the buffoon when it suits him, but I think you underestimate him. He won a scholarship to Oxford, so I doubt he can be an idiot.

I used to think that people who went to university were smart, then I worked with a few. I also used to think that people who studied at a prestigious university were really smart, then I read some articles written by some including an article from a gentleman who studied at one of the UK's greats. He noticed the same problems I had of the regulars and was pretty scathing in his attacks on his peers. And more recently I watched a video by a well published career researcher who quite rightly tore some MIT engineering students a new one.

As a society we need to get away from this idea that having a university education equates to smart or even capable. It's one pieces of the puzzle perhaps, but definitely not the everything some make it out to be.

kimwp

I'm personally saddened (as a 40% tax payer) that there is no plan for NI to rise to 12% for all. It is ridiculous that it drops by 10% for people earning more money - so far everyone on that rate that I have spoke to was not even aware that their NI contributions drop.

Jeremy535897

LandOfConfusion said:

csgohan4 said:

  But oh no some people are complaining, I am entitled to this and I paid my taxes blah. 

From what I've seen the younger (pre-Boomer) generations are largely not complaining about inheritance but what they are complaining about is why they are being told to pay for the care of someone else who hasn't put the money in themselves. But perhaps I'm just biased in the places I go and the people I talk to, and to be honest I don't personally know that many Boomers outside of the Buy-To-Let arena so maybe that's it?

You're right though that people's money / other people's 'inheritance' should be spent on the social care of the current owner first and foremost. It's not right that potential inheritances should be protected at the expense of the rest of society but then again, look at who's arguing for that policy and look at who they vote for.

Johnson chooses to play the buffoon when it suits him, but I think you underestimate him. He won a scholarship to Oxford, so I doubt he can be an idiot.

I used to think that people who went to university were smart, then I worked with a few. I also used to think that people who studied at a prestigious university were really smart, then I read some articles written by some including an article from a gentleman who studied at one of the UK's greats. He noticed the same problems I had of the regulars and was pretty scathing in his attacks on his peers. And more recently I watched a video by a well published career researcher who quite rightly tore some MIT engineering students a new one.

As a society we need to get away from this idea that having a university education equates to smart or even capable. It's one pieces of the puzzle perhaps, but definitely not the everything some make it out to be.

What I said is that I doubt anyone capable of winning a scholarship to Oxford is likely to be an idiot. It doesn't necessarily make them a genius. In any event, very clever people are not necessarily the right people to be leaders. For one thing, politicians have to be able to convince the electorate that there are clear, simple solutions to the complex problems we face. As H L Mencken pointed out, such solutions are also wrong.

[Deleted User]

kimwp said:

I'm personally saddened (as a 40% tax payer) that there is no plan for NI to rise to 12% for all. It is ridiculous that it drops by 10% for people earning more money - so far everyone on that rate that I have spoke to was not even aware that their NI contributions drop.

Prior to 2003/04 it was 0% rate above the upper limit. Put simply there was a maximum on the total NIC paid.

pjread

kimwp said:

I'm personally saddened (as a 40% tax payer) that there is no plan for NI to rise to 12% for all. It is ridiculous that it drops by 10% for people earning more money - so far everyone on that rate that I have spoke to was not even aware that their NI contributions drop.

There's a lot of assumption baked in to that.  it'd push marginal rates to 52% *minimum* above 50k (which isn't what it once was as an income, especially in London/SE).  Add in child benefit clawback (2 kids?  That'll be ~69% marginal tax if you're on 60k!) or personal allowance withdrawal (on 100k+?  Congratulations, that's 28p you keep for any £ you earn!)

It's a first world problem and I'll dig out my flame retardant jacket while I say it, but 70%+ tax rates on income are ridiculous however much you earn.  You'd see even more e.g. doctors and so on going part time to avoid it, they're already doing so to avoid the existing 50/60% marginal rates.

csgohan4

pjread said:

kimwp said:

I'm personally saddened (as a 40% tax payer) that there is no plan for NI to rise to 12% for all. It is ridiculous that it drops by 10% for people earning more money - so far everyone on that rate that I have spoke to was not even aware that their NI contributions drop.

There's a lot of assumption baked in to that.  it'd push marginal rates to 52% *minimum* above 50k (which isn't what it once was as an income, especially in London/SE).  Add in child benefit clawback (2 kids?  That'll be ~69% marginal tax if you're on 60k!) or personal allowance withdrawal (on 100k+?  Congratulations, that's 28p you keep for any £ you earn!)

It's a first world problem and I'll dig out my flame retardant jacket while I say it, but 70%+ tax rates on income are ridiculous however much you earn.  You'd see even more e.g. doctors and so on going part time to avoid it, they're already doing so to avoid the existing 50/60% marginal rates.

It has already happened with NHS staff and understandably, they are not a charity and effective >60% tax is not palatable for more hours. 

People who claim Doctors earn too much, would you be happier to pay them 10/hour and get poor quality and see the UK grads move abroad for better pay. Indeed Australia/Canada  is a popular destination for them.

It is market forces as well. You get what you pay for? Those years in medical school and training are not as easy as stacking shelves at Sainsbury.  Also one mistake could cost your career, even non serious errors due to reputation damage. You wonder why Doctors are so defensive now a days. 

https://www.gponline.com/pension-tax-dossier-reveals-nhs-service-closures-doctors-forced-cut-hours/article/1664914

https://www.rcseng.ac.uk/news-and-events/media-centre/press-releases/pension-tax-member-survey/

The same could be said of traditional high paying jobs in banking, investment banking, all the money is paid because it is a high risk job. You could get your P45 the next day for looking at your manager the wrong way or screw up a deal once. 

Pennywise

kimwp said:

I'm personally saddened (as a 40% tax payer) that there is no plan for NI to rise to 12% for all. It is ridiculous that it drops by 10% for people earning more money - so far everyone on that rate that I have spoke to was not even aware that their NI contributions drop.

But the income point where it drops from 12 to 2 is the same point where income tax rises from 20 to 40.  So when you cross that threshold, your effective marginal "tax" rate increases from 32% to 42% (plus child benefit claw back and student loan repayments and workplace pension deductions if applicable).

It would all be a lot simpler/fairer if NIC was just scrapped and income tax increased.  That way we could have more thresholds, i.e. increments of 5% instead of 10% to get to a steadier "tax" curve as income increases.

Any marginal tax rate over 50% is a disincentive to work more/harder to earn it.  The tax/nic and other statutory deductions should have a limit of a 50% marginal rate so that you always "take home" at least half of your gross/pre tax pay.  Lots of scope to have marginal tax rates between 0% and 50% which could easily be 5% increments rather than the "lumpy" marginal rates we currently have.