On the 7th of September 2021, the government declared an updated 1.25% Health and Social Care Levy. The aim of the levy is to grant investment in the NHS, health and social care. This new plan for health and social care will cause an everlasting rise in spending.
In 2020/21, government borrowing was high due to Coronavirus. As a result, it is considered that the rise in taxation would be the most capable way to fund these investments in health and social care.
The scheme will come into account on 6th April 2022 and indicates that employees’ National Insurance contributions will rise. As an employer, if you pay Class 1, Class 1A or Class 1B National Insurance contributions, you’ll require to begin giving the 1.25% increase in contributions from 6th April 2022. These changes will not impact employees who are above State Pension age and are not an employee or self-employed.
Since April 2023, NICs rates will be back to 2021-22 levels and the 1.25% levy will turn into a separate new tax. You will need to pay the separate 1.25% levy, and this will also be applicable to the earnings of working individuals who are above State Pension age.
For guidance on the Health and Social Care Levy, visit www.gov.uk.