On 7 September 2021, the government announced tax changes to help fund reforms of the health and social care system in the UK.
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, but will not impact those above State Pension Age.
From April 2023, a new ringfenced Health and Social Care Levy of 1.25% will be introduced which will apply to those who pay Class 1 (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs. The levy will also be extended to those over State Pension age who are in work with employment income or profits from self-employment above £9,568.
When the new levy comes into effect, National Insurance rates will revert back to current levels.
The levy will be administered by HMRC and collected through the current reporting and collection procedures for NICs – Pay As You Earn and Income Tax Self Assessment.
The government will also increase the rate of income tax which is paid by people who receive dividend income from shares by 1.25% from April 2022.
If you would like to discuss how this will affect you please contact us.Latest Link: A summary of the Spring Budget 2023