On Tuesday (7th September) the government announced tax changes to raise an extra £12 billion a year to be spent on NHS and social care across the UK.
As a result, National Insurance Contributions (NICs) will increase by 1.25% for one year only for employees, employers and the self-employed from April 2022. This will cover both Class 1 (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs.
From April 2023, a new Health and Social Care Levy of 1.25% will be introduced which will apply to those who pay Class 1, Class 1A and 1B and Class 4 NICs and will also be extended to those over State Pension age who are in work. National Insurance rates will then revert back to 2021 levels, as replaced by the new Health and Social Care Levy.
The levy will also apply to those above State Pension age with employment income or profits from self-employment above £9,568.
The levy will be collected through the current reporting and collection procedures for NICs – Pay As You Earn and Income Tax Self Assessment.
Levy contributions will apply UK-wide.
From 2023, levy contributions will appear as a separate item on payslips.
From April 2022, the government will also increase the rate of income tax which is paid by people who receive dividend income from shares by 1.25%.
For more information please visit GOV.UK.