The Health and Social Care Levy
The Government announced on 7 September 2021 The Health and Social Care Levy which is being implemented from 6 April 2022 to increase funds for the National Health Service.
The Health and Social Care Levy will see a 1.25% increase in National Insurance Contributions (NICs).
The increase in NICs will initially affect everyone over the age of 16, but below state pension age, with employed income of more than £184 per week, and self-employed profits of more than £9,568 a year.
The 1.25% increase will also apply to employer contributions separately.
From 6 April 2023, the Health and Social Care Levy will also apply to individuals working above State pension age as well. Currently, this group are not required to pay any NICs.
| Currently | From 06/04/22 | ||
| Class 1 Primary NIC (Employee) | £0 - £9,568 £9,568 - £50,270 |
0% 12% |
0% 13.25% |
| Class 1 Secondary NIC (Employer) | £0 - £8,840 Above £8,840 |
0% 13.5% |
0% 15.05% |
| Class 4 NIC (Self Employed) | £0 - £9,568 £9,568 - £50,270 Above £50,270 |
0% 12% 2% |
0% 13.25% 3.25% |
Below are some examples of the increase in your NICs depending on your earnings:
£20,000 per year - £130
£30,000 per year - £255
£50,000 per year - £505
£80,000 per year - £880
£100,000 per year - £1,130
These amounts will be made in addition to your existing NICs.
Dividend Tax
The rates of income tax on dividends received will also increase, excluding dividends received on investments held within ISAs.
| 2021/22 | 2022/23 | ||
| Basic rate band | £2,000 - £37,700 | 7.5% | 8.75% |
| Higher rate band | £37,700 - £50,270 | 32.5% | 33.75% |
| Additional rate Band | Above £150,000 | 38.1% | 39.35% |
Obviously, this is based on the dividend allowance remaining at the same level of £2,000.
In addition, it is possible that Section 455 charge may also be increased from 32.5% to 33.75% in line with the higher rate of dividend tax from 6 April 2022, this has not been confirmed yet.
If you wish to discuss any of the above, please phone 01874 622381 to discuss this.
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