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Home > Company News > FOCUS ON ACCOUNTANCY: Health & Social Care Tax – What you need to know

FOCUS ON ACCOUNTANCY: Health & Social Care Tax – What you need to know

Posted on: 14/10/2021

This comes into force in two stages, the first in April 2022 through an increase in National Insurance contributions (NICs), before this is replaced in April 2023 by a new Health and Social Care Tax (HSCT).

From April 2022, NICs for working age employees, self-employed and employers will increase by 1.25% and be added to the existing NHS allocation to allow HMRC systems to be updated. From April 2023 NICs will return to their 2021-22 levels.

The new Levy will apply to the same population and income as Class 1 (Employee, Employer) and Class 4 (Self-Employed, including partners) National Insurance, and to the main and higher rates.

From April 2023 onwards the HSCT will apply including to those above State Pension age who are still in employment. The increase will not apply to Class 2 NICs (the flat rate paid by the Self-Employed) or Class 3 NICs (voluntary contributions for taxpayers to fill in gaps in their contribution records to qualify for benefits).

In addition to the above there will be an increase in the rates of dividend tax by 1.25% from April 2022.

On the flip side, from April 2023 no-one will pay more than £86,000 for the care they need for daily tasks such as washing, dressing and eating whether that is in a care home or provided to people in their own home.

However it appears that accommodation costs of care for those in care homes such as food, energy bills and the physical building – would not count towards the cap. At the time of writing the government has not said how much people should be prepared to contribute for these daily living costs nor whether these may be capped.

In addition, spending on care will count towards the cap only for people assessed by the local council as in need enough to be eligible. Only the frailest – those unable to do daily tasks such as washing, dressing and eating – qualify and more than half of current requests are turned down – with the County Councils Network predicting this will not change significantly with the changes announced.

For more information regarding NICs and the HSCT please contact Carla Hobby on 01202 715950.

This article is featured in the October issue of the Dorset Business Focus magazine. Read on the online version here.


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