Health and Social Care Levy
In September, the Chancellor announced an increase of 1.25% to both the main and additional rates of Class 1, Class 1A, Class 1B and Class 4 National Insurance contributions (NICs) for the 2022/23 tax year.
After that date the rates of NIC will reduce back to their 2021/22 levels, but a new ‘Health and Social Care Levy’ of 1.25% will be introduced instead.
The revenue raised from this measure will go directly to support the HHS and equivalent bodies across the UK.
The table below shows the current NIC rates compared to the revised rates:
|Current rate||Temporary rate|
|EE NIC on earnings between £9,568 and £50,270||12.00%||13.25%|
|EE NIC on earnings over £50,270||2.00%||3.25%|
|ER NIC on earnings over £8,840||13.80%||15.05%|
Clearly, the introduction of the Health and Social Care Levy will increase payroll costs for employers and their workforces.
The table below sets out some example salaries and the impact on both take home pay and cost to the employer:
|Current take home pay||13,862||20,662||27,462||34,262||35,561||41,361|
|Revised take home pay||13,794||20,469||27,144||33,819||34,993||40,668|
|Reduction in take home pay||68||193||318||443||568||693|
|Current ER cost||15,850||27,230||38,610||49,990||61,370||72,750|
|Revised ER cost||15,927||27,432||38,937||50,442||61,947||73,452|
|Increase in cost||77||202||327||452||577||702|
Following the announcement there have been no further technical details released by the government.
If you would like to discuss this further, please do not hesitate to contact us at firstname.lastname@example.org.