On 7th September 2021, prime minister Boris Johnson, announced that a new Health and Social Care Levy will be implemented from tax year 2022/23, therefore will start in April 2022. The new levy will be based on National Insurance contributions and for all working age employees, self-employed and employers, NIC rates will be increased by 1.25% for that year. As the levy
will be collected via NICS, the levy will not impact individuals who are state pension age and above, and still working, as they are placed under category letter C, under which no employee NI deductions are taken.
From tax year 2023/24, however, the Health and Social Care levy will be formally separated out as a deduction in its own right, and NIC rates will revert to 2021/22 levels. At this point, employers are required to clearly state the levy as a new deduction element on employee payslips, and those who are state pension age and above, and still working, will be required to pay the 1.25% levy.
The levy will be paid on earnings above the Primary Threshold and Lower Profits Limit (£9,568 in 2021 to 2022 tax year). In 2022/23 tax year an individual earning the median basic rate taxpayer’s income of £24,100 would be expected to pay an additional £180; and an individual earning the median higher rate taxpayer’s income of £67,100 would be expected to pay an additional £715.
There may be an impact on family formation, stability or breakdown as individuals, who are currently just about managing financially, will see their disposable income reduce.
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