Revealed: ‘Stealth tax raid’ to hit almost 5m healthcare workers with higher bills

A “stealth tax raid” by Rishi Sunak and Jeremy Hunt will force almost 5m healthcare workers to pay hundreds of pounds more in tax, analysis shows.

The government’s decision to freeze income tax and national insurance thresholds will cost health workers an additional £1.5billion per year, the figures reveal.

In March 2021, then chancellor Mr Sunak announced the threshold at which taxpayers are charged the higher rate will be frozen until 2026. Chancellor Jeremy Hunt has since extended this for a further two years.

The threshold at which workers begin paying National Insurance is also frozen until 2028, meaning an effective rise for those paying over time.

Forecasts from the government’s spending watchdog show the freezing of tax thresholds will lead to a total tax hit of £13.1billion next year. And analysis by the House of Commons Library estimated around £1.5billion of this - or around £320 each - would fall on those working in hospitals, medical and dental practices, residential care homes and social care workers.

Official figures show there are around 4.7million people working in human health and social work activities.

The research, commissioned by the Liberal Democrats, also found around £1billion would fall on those working in the education sector.

Experts warned the tax raid will penalise “some of the lowest paid in society” and warned a further squeeze on healthcare workers poses a risk to the ability to attract and retain staff.

Tom Pollard, head of social policy at think tank the New Economics Foundation, said the government should be “protecting low-income households from the impact of high inflation”. “A further squeeze on the incomes of health and social care staff poses a risk to not only their security and wellbeing but also the ability of services to attract and retain the staff required to deliver essential care,” he added.

And unions hit out at the stealth taxes, which will “swallow up” any pay rises going to those on lower incomes.

GMB national officer Natalie Grayson said: “GMB members in health and social care tell us they struggle to pay bills due to being on a low income despite working full time.

"A tax raid on the lowest paid is an unfair burden on care workers having to pay the price for a decade of mismanagement of the healthcare system.

"This is another example of how this Government doesn’t value care workers.

"Instead, Ministers seek to protect the wealth of the private care companies and investors - they are the ones who can afford to pay the rise."

And UNISON social care head Gavin Edwards said: “Ministers should be doing everything they can to resolve the NHS and social care workforce crises.

“Allowing a hefty chunk of any pay rises for those on lower incomes to be swallowed up will not help.

“The government must ensure higher earners and big businesses are paying their fair share of tax, not hitting those at the bottom end.”

Liberal Democrat leader Sir Ed Davey told The Independent: “Health and social care workers do an incredible job working day in and day to look after our sick and elderly. But Rishi Sunak’s response is to hammer them with a huge stealth tax raid coming in the middle of a cost of living crisis.

“It shows our nurses and care workers are being totally taken for granted by this out of touch Conservative government. These unfair tax rises risk worsening the already dire staff shortages facing our hospitals and care homes.

“We need to end this vicious cycle of stagnating economic growth and health services being stretched to breaking point. That starts by bringing in a Carer’s Minimum Wage, to tackle staff shortage and pay our care workers properly.”

A Treasury spokesman said: “We have taken millions out of paying tax altogether by consistently raising income tax and National Insurance allowances, with the top 5% of earners projected to pay half of all income tax this year.

“We are also supporting our NHS with a £165.9 billion increase to its resource budget in 2024-25, an extra £7.5 billion to support adult social care and discharge, and an extra £4 billion over 2023-25 to boost the core schools budget.”