You may well have seen the news about the proposed increase in national insurance contributions for both employees/employers and also for company dividends as well. We have now received more detailed information from the tax office as follows :

National Insurance Changes

National Insurance contributions (NICs) will increase by 1.25% for one year only for employees, employers and the self-employed from‌‌ ‌April‌‌ ‌2022. This will cover both Class 1 (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs. Those above State Pension Age are not impacted by the April 2022 changes.

From April 2023, a new ringfenced Health and Social Care Levy of 1.25% will be introduced which will apply to those who pay Class 1 (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs and will also be extended to those over State Pension age who are in work. When the new levy comes into effect, National Insurance rates will revert back to current levels.

The levy will also apply to individuals above State Pension age with employment income or profits from self-employment above £9,568.

The levy will be administered by HMRC and collected through the current reporting and collection procedures for NICs – Pay As You Earn and Income Tax Self Assessment.

Like National Insurance, levy contributions will apply UK-wide, people will pay the same in England, Scotland, Wales and Northern Ireland.

From 2023-24, levy contributions will need to appear as a separate item on payslips. Where possible a generic message should be included payslips for the next tax year (2022-23). More information on payslip requirements will be available in due course.

The government will also increase by 1.25% from April 2022 the rate of income tax which is paid by people who receive dividend income from shares.

Changes to Care Costs

If you would like to read more about HMRC’s plans for Health and Social Care please click on the link below

https://www.gov.uk/government/collections/our-plan-for-health-and-social-care

The document includes a statement by Boris Johnson about their plans and also the promise of ensuring that care costs will be capped in future...

“We will protect individuals and families against unpredictable and potentially catastrophic care costs – so that from October 2023, no eligible person starting adult social care will have to pay more than £86,000 for personal care over their lifetime.”

There are a number of examples in the document, the amount to pay will vary depending on the assets you hold.

No doubt more information will flow through over time and we will let you know as it does.

Any questions at all just get in touch to chat it over.