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Ministers considering over 40’s tax

Mike Wakeford

Ministers in the United Kingdom are considering new ways to fund the increasing cost of social care. 

One of the suggested methods has been successfully used in Germany for nearly two decades and involves placing a 2.5% levy onto the income and earnings of those aged over 40.

By 2031 social care funding in the UK is expected to have a deficit of £30bn a year in funding. Research conducted by Hymans Robertson suggests the proposed German-style tax could raise £15bn a year, plugging half of the gap. 

Secretary of State for Health and Social Care, Matt Hancock has previously said the idea is something he is attracted to. The tax is could be an option in a government green paper which is expected to be released before Christmas highlighting the different methods of funding. 

In a joint report by the House of Commons and local committees, the tax would be applied to everyone aged over 40, including pensioners over the age of 65.

The tax would either be part of an enhanced national insurance contribution or collected through a separate method and those on low incomes are likely to be excluded.