As you may have already seen, Boris Johnson announced a new Health & Social Care Tax today, which will initially be collected through an increase to National Insurance and Tax on dividends, before a new separate Levy is introduced. The purpose of the Levy is to initially help fund the NHS in the aftermath of the COVID-19 pandemic, as well as paying for reforms to the care sector.
What will this mean for you?
- If you are EMPLOYED, the National Insurance you pay on your employment income will increase by 1.25% from April 2022. From April 2023, this will show as a separate deduction on your payslip.
- If you are ABOVE STATE PENSION AGE, you will be required to pay the additional 1.25%, even if you are otherwise exempt from National Insurance contributions.
- If you are SELF-EMPLOYED, the National Insurance you pay on your self-employment profits will increase by 1.25% from April 2022. From April 2023, we expect this to be calculated separately on your self-assessment return.
- If you are an EMPLOYER, the National Insurance you pay on your employees' earnings with increase by 1.25% from April 2022. From April 2023, the levy will be calculated separately as part of your PAYE bill.
- If you receive DIVIDEND INCOME, we understand the tax you will pay on your dividends to increase by 1.25% from April 2022. From April 2023, we expect this to be calculated separately on your self-assessment return.
A lot of the detail about how the new Levy will be implemented have yet to be released, however this is likely to be a costly increase to many. If you are concerned about how the new Levy may impact you, please contact us today.
