Health and Social Care Levy
2 minutes to read
What is the new Health and Social Care Levy?
The purpose of the Government’s new UK wide Health and Social Care Levy is to raise an expected £12 Billion per annum in additional funds for health and social care following the economic impacts of the Coronavirus pandemic.
The new levy becomes effective from 06th April 2022.
How much is the new Health and Social Care Levy?
From 06th April 2022 to 05th April 2023, the levy will come in the form of a 1.25% increase to both Employee’s (currently 12%) and Employer’s (currently 13.8%) National Insurance Contributions (NIC).
In addition to this, on 23rd March 2022, the Chancellor of the Exchequer announced that the government is raising the level at which employees start to pay National Insurance. However, this change will not become effective until 06th July 2022, so the level of NIC paid by employees in the 2022/23 tax year will be as follows:
Furthermore, Employer’s NIC will be raised to 15.05% on taxable income above £9,100 (£175 per week / £758 per month). Note that unlike Employee’s NIC, there are no planned changes to the levels at which Employer’s NIC is payable.
From 06th April 2023 onwards, National Insurance % rates will return to their current levels and the levy will become a new separate 1.25% tax for employers and a new separate 1.25% tax for employees. This means that unless the Government make any further changes, the effects on your pay will remain unchanged from 06th July 2022.
As an Umbrella employee, your pay advice slip will change as follows:
Effective 06th April 2022 to 05th April 2023 the levy increase of 1.25% will be applied to both the Employer’s and Employee’s NIC elements shown on your pay advice slip. We will also include a small narrative to confirm this. Then from 06th July 2022, the level at which you pay Employee NIC will be increased to £12,570 per annum (242 per week / £1048 per month).
Then from 06th April 2023 onwards, the levy will be shown as separate items for both the Employer’s and Employee’s deductions. We will also include an updated narrative to further explain this change.
You can learn more here about how the new Health and Social Care Levy may affect you.