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Prime Minister, Boris Johnson, last night won the backing of MPs for his health and social care plan, based on a package of National Insurance Contributions (NICS) and tax rate increases from April 2022.

A motion approving the £12bn a year package was passed in parliament by 319 votes to 248. 

National Insurance Contributions

From April 2022 NICs will increase by 1.25% for one year only 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 State Pension Age are not impacted by the April 2022 changes. From April 2022 the government will also increase by 1.25% the rate of income tax which is paid by those who receive dividend income from shares.

From April 2023, a new ringfenced Health and Social Care Levy of 1.25% will be introduced which will apply to those paying Class 1 (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs and will be extended to those over State Pension age who are in work. The levy will also apply to individuals above State Pension age with employment income or profits from self-employment above £9,568. When the new levy comes into effect, National Insurance rates will revert to current levels.

How will this levy be collected?

HMRC will administer the new levy. It will be reported and collected through the current procedures for NICs; Pay As You Earn and Income Tax Self-Assessment.

Like National Insurance, the levy contributions will apply UK-wide. People will pay the same in England, Scotland, Wales, and Northern Ireland.

Employers to be aware

From 2023-24, levy contributions will need to appear as a separate item on payslips. Where possible a generic message will need to be included payslips for the next tax year (2022-23). More information on payslip requirements will become available in due course.

For more information 

Further details can be found on the government website under 'Our Plan for Health and Social Care'.

 

About the Author

Paul Newbold Image

Paul Newbold

Partner
After qualifying with KPMG where he gained significant audit experience, Paul joined Torgersens in 1991 and became the firm’s audit partner in 2000. Paul employs his broad range of financial skills to provide commercial and accounting advice to a range of owner-managed businesses in the independent retail, education and professional services sectors. He also has extensive experience dealing with charities, Registered Social Landlords and not-for-profit organisations and co-operatives.   Outside of work, Paul likes to visit Eastern France and South-West German and read novels by David Morrell, Michael Blake and Harper Lee. He also likes watching films, his favourite is The Shawshank Redemption.

To get in touch please e-mail paul.newbold@torgersens.com.

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