NIC Increase and What the Future Changes to National Insurance Mean

A couple of weeks ago the government announced tax changes which will be spent on the NHS and social care across the UK.

---

From 6.4.2022 to 5.4.2023 National Insurance Contributions (NICs) will increase by 1.25%.

 

This NIC increase will affect:

• employees,
• employers and
• the self-employed

 

The increase in national insurance is applicable to:

• Class 1 (employee and employer),
• Class 1A and
• Class 4 (self-employed) NICs.

 

There will also be an equivalent increase in dividend tax rates from April 2022.

 

The New Health and Social Care Levy

 

From April 2023, a new ringfenced Health and Social Care Levy of 1.25% will be introduced. This will apply to those who pay:

• Class 1 (employee and employer),
• Class 1A and
• Class 4 (self-employed) NICs
• It will also be extended to those over State Pension Age who are in work.

 

When the new Levy comes into effect, National Insurance rates will revert back to current levels.

Your payroll software should be automatically updated to include the changes which affect your payroll from April 2022, so please ensure you are running the latest version of the software (where applicable).

If you would like any further guidance around the NIC increase or have any questions on the above, please contact us.