Tax Changes for Health and Social Care. What you need to know.
A week ago, the government announced a tax change to help fund the NHS and social care across the UK, reported to raise around £12 billion a year. Whether you agree with it or not, here are the changes you need to be aware of:
National Insurance contributions (NICs) will increase from 12% to 13.25% for one year only from April 2022 for employees, employers and the self-employed. This will cover both Class 1 (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs. Those above the State Pension Age aren’t impacted by the April 2022 changes.
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, 1B and Class 4 (self-employed) NICs and will also be extended to those over the State Pension age who are in work. Once the new levy comes into effect, the National Insurance rates will revert to the current rates they are now.
The Levy will also apply to individuals above the State Pension age with employment income or profits from self-employment above £9,568.
The levy will be administered by HMRC and collected through the current reporting and collection procedures for NICs – PAYE and Income Tax Self Assessment.
Like National Insurance, levy contributions will apply UK-wide across England, Scotland, Wales and Northern Ireland and will all pay the same.
From 2023-24, levy contributions will need to appear as a separate item on payslips. Wherever possible, a generic message should be included on payslips for the next tax year (2022-23). More information on payslip requirements will be available in due course.
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 need any further information regarding this or are worried about the impact it has on your business feel free to get in touch.