Interactive Investor

New tax will make workers – even older ones – feel that bit poorer

7th September 2021 14:11

Rebecca O'Connor from interactive investor

interactive investor comments on plans for those over state pension age to pay new social care levy.

The government has today announced a range of measures to fund social care in the UK, including, from April next year, a 1.25% ‘health and social care levy’, on National Insurance and dividend income.

This is set to apply to income earned by all workers who earn above the limit, including those over state pension entitlement age.

There are more than one million workers in the UK aged over 65, according to the most recent ONS figures.

Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “The introduction of this levy is a kiss goodbye to one long-held advantage of continuing to work past the state pension entitlement age, which is that you wouldn’t have to pay national insurance contributions on what you earn.

“From next April all workers, including some of the more than one million over 65s in employment, will pay the new levy on National Insurance and will feel that bit poorer.

“While working past state pension age may be a lifestyle choice for some, it’s a horrible irony that many remain in employment out of necessity, because their pension provision is not adequate to fund their whole retirement and they are now being asked to pay more for the privilege.

“While many older workers will still not be earning enough to pay more National Insurance, some, including those working full time to make ends meet, will see an increased bill. This group in particular may not welcome today’s announcement.”

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.