1.2% Increase to National Insurance Contributions

From‌‌ ‌April‌‌ ‌2022,National Insurance Contributions (NICs) are set to rise by 1.25% to cater for a new health and social care tax. This increase will apply to employees, employers and the self-employed.

The government announced the rise in tax to fund £12 billion a year, over the next three years, for the NHS and social care in the UK.

It will cover NICs for Class 1 for employee and employer, Class 1A and 1B and Class 4 for the self-employed.

Then from April 2023, this new 1.25% ‘Health and Social Care Levy’ will become a separate tax on income and in addition to those who pay Class 1, Class 1A and 1B and Class 4 NICs, those over State Pension age, who are in work, will also be required to pay. This tax will be ringfenced purely for health and social care.

From 2023-24, employers will need to add the levy contributions separately on payslips as a separate tax. In the year prior, employers will be tasked with adding a general message on payslips to indicate the tax. We’re currently awaiting more detail on what’s required and we will have further updates as and when we receive this information.

This will also impact those with income from share dividends who will see a 1.25% tax increase.

If you’re an employer or self-employed and you have any questions on the requirements for this tax change and what’s needed for future payslips, then contact our team of accountants who can help guide you on the necessary requirements for the next tax year.

We are Chartered Accountants in Oxted, Surrey. Our team of accountants are on hand to help you navigate personal tax returns including employment tax and Self-Assessment Tax.