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 rateTemporary rate
EE NIC on earnings between £9,568 and £50,27012.00%13.25%
EE NIC on earnings over £50,2702.00%3.25%
ER NIC on earnings over £8,84013.80%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:

Example salary    15,000    25,000    35,000    45,000    55,000    65,000
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.

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