Health and social care levy announcement

by James MacDonald

8 September 2021

Yesterday, a new NHS Levy of 1.25% payable by employees and employers was announced by Parliament and is due to be approved today. Whilst it seems to be be similar to National Insurance, there are some significant differences.

Health and Social Care Levy

The new Health and Social Care Levy will come into effect from April 2022. For the tax year 2022/23 it will be termed an increase in the rate of National Insurance Contributions payable by working people and employers. It will also increase the rates of tax payable on dividend income.  From 2023/24, it will be described as a separate levy and identified as such on payslips etc. Unlike National Insurance Contributions, the new levy will also be payable by people who have attained State Pension age but continue working.

The rates will be as set out below


EmployeeEmployerSelf-employed
Main / higher rateMain / higher rate
2021/22
Current NIC rates12% / 2%13.80%9% / 2%
2022/23
NIC rates13.25% / 3.25%15.05%10.25% / 3.25%
2023/24
NIC rates12% / 2%13.80%9% / 2%
Levy1.25%1.25%1.25%
Threshold*
(2021/22)£9,568£8,840£9568

*Figures are included for illustration but may well be changed for future tax years.

Existing NIC reliefs to support employers will also apply to the new levy.

 

Dividend Tax Increase

From April 2022, all tax rates on dividend income will increase by 1.25%. The change will be included in the Budget and legislated for the in the resultant Finance Bill.

The new rates will be:


Basic RateHigher RateAdditional Rate
2021/22 rates7.50%32.50%38.10%
2022/23 rates8.75%33.75%39.35%

 

If you have any questions about how the new levy may affect you or your business please get in touch with our tax team or your usual contact at Ecovis.

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