The new Health and Social Care Levy: what does it mean for you?
Earlier this week, the government announced plans to raise the rate of National Insurance and the rate of tax on dividends from 6 April 2022.
These are in addition to the changes announced earlier in the year to freeze the inflationary increase of personal tax bands, NI thresholds and the planned increase in corporation tax.
From 6 April 2022 the government will be introducing the Health and Social Care Levy. This will initially be shown as an increase in the rate of National Insurance, but from 6 April 2023 it will be its own separate levy.
Who will be affected?
This increase will only impact those already in charge of National Insurance in 2022/23. But it will then apply to working persons, even above state pension age, in 2023/24 and onwards when the levy becomes separated from National Insurance.
The levy will impact the rates of Class 1 primary, Class 1 secondary and Class 4 National Insurance contributions in 2022/23. There will be no impact on the rates of Class 2 or Class 3 contributions. The changes are summarised below:
From 6 April 2022 the rates will increase as follows. The dividend allowance of £2,000 will remain.
Further information can be found in the policy document published by the government.
If you have any concerns about these changes, please get in touch with a member of our tax team on 01903 234094.