It’s been hanging in the balance for a while but it’s now confirmed that the Health and Social Care levy is definitely on its way.
Here’s a reminder of what’s to come:
From 6 April 2022, there will be an increase of 1.25% on all earnings to help fund shortfalls in health and social care.
To be able to introduce the tax increases swiftly, the 1.25% increase will be included in National Insurance contributions (NIC) for employees, employers and the self-employed.
The increases represent a total 2.5% increase for employed workers (1.25% each for employee and employer) and 1.25% for self-employed.
The 1.25% increase will also apply to tax paid on dividends from the same date, taking rates to:
- 8.75% for basic rate taxpayers
- 33.75% for higher rate taxpayers
- 39.35% for additional rate taxpayers
The £2,000 dividend allowance will remain.
A new tax from 2023
From 6 April 2023, the temporary NIC increase will be removed and replaced by the new Health and Social Care tax – at the same rate of 1.25% – which will appear as a separate line on payslips and self-assessment payments.
Next steps
If you need any advice or support, please contact us and our friendly tax team will be happy to help you.
Inspire is an award-winning business and tax advisory firm, here to help business owners on their journey through both challenging and successful times. www.inspireaccountants.co.uk.