Introduction of Health & Social Care Levy
Prime Minister Boris Johnson has today announced the introduction of a new “Health and Social Care Levy” in order to fund health and social care.
The new tax will apply UK-wide and be introduced in two stages:
Stage 1 – 6 April 2022
Class 1 and Class 4 National Insurance contributions will increase by 1.25% points, and will therefore apply to employers, employees, and self-employed individuals. Those earning less than the Primary Threshold/Lower Profits Limit will not pay the levy.
Furthermore, dividend tax rates will also increase by 1.25% points. However dividends received from shares held in ISAs will not be affected.
Stage 2 – 6 April 2023
On 6 April 2023, the 1.25% National Insurance increase will instead be charged as a separate “Health and Social Care Levy” on earned income from 2023. This will be paid by all working adults, including those over the state pension age who do not normally pay National Insurance.
It is worthy of note that the Employment Allowance which provides relief of up to £4,000 will also apply to the levy.
PD Tax are following this news with interest, and will provide updates as and when they become available.