HOW THE NEW HEALTH AND SOCIAL CARE LEVY ANNOUNCEMENTS AFFECT YOU
The Government announced today that from April 2022, a new 1.25% UK-wide Health and Social Care Levy will be introduced, the contributions to be ringfenced for health and social care investment. This will be paid by both employees and employers, so the additional amount raised will be 2.5%.
All working adults, including those over the state pension age who were previously exempt from paying National Insurance, will pay the levy. For the self employed, the additional 1.25% will be payable on your self employed profits.
What’s more, the government also announced an increase of 1.25% in dividend tax rates, under the health and social care reform. Although, not social security, this has the affect of aligning the national insurance increase and dividend tax rates.
If, however, your dividends fall within the dividend allowance of £2,000, the 1.25% will not apply.
From April 2022, you will see the National Insurance deduction on your payslip increase by 1.25%, reducing your take home pay. From April 2023, the levy will be a tax in its own right, and you will see a separate line on your payslip for this deduction.
In view of the date of the changes, the timing of payments will be critical as to whether the 1.25% is payable.
