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National Insurance rise takes effect
The Government has introduced a new health and social care levy to help cover the costs of the NHS backlog.
The 1.25% rise in National Insurance contributions (NICs) and dividend tax came into effect today (6 April), and will apply until April 2023. After this, rates will return to their previous levels and a separate new tax of 1.25% will apply..
It is estimated that the introduction of this levy will raise £17 billion a year, with the Government aiming to invest £39 billion of it into the health and social care sector over the next three years.
This means that instead of paying NICs of 12% on earnings up to £50,270 and the extra 2% on anything over, employees will now be paying 13.25% and 3.25%.
Self employed workers will see their rates go up from 9% and 2% to 10.25% and 3.25%.
Some employees are exempt from paying the increase, such as:
- Apprentices under 25 years old
- Employees under 21 years old
- Armed forces veterans
- Employees of Freeports
Chancellor Rishi Sunak said:
"The new Health and Social Care Levy is the necessary and responsible thing to do to protect the NHS, sharing the cost between businesses and individuals and ensuring those earning more pay more."
Ask us about your NICs.