New Health & Social Care Levy Announced
Boris Johnson has confirmed that National Insurance (NI) rates are to be increased to support the NHS & address the funding gap for health & social care.
The increase is 1.25% & will be introduced from April 2022. This will affect Class 1 NI, which is paid by both employees & employers & Class 4 NI, which is paid by individuals who are self-employed or partners in a partnership. The increase will also apply to the rates of Class 1A & 1B NI, which are payable by employers on certain benefits in kind provided to their employees.
From April 2023 the increases will be extended to apply to individuals over state pension age who have employment income or who are self-employed or in partnership. These individuals are currently exempt from paying NI.
As well as the increase to NI, the rates of tax payable on dividends will also increase by 1.25% from April 2022. The new rates will be as follows:
- Basic rate: 8.75%
- Higher rate: 33.75%
- Additional rate: 39.35%
The dividend allowance, which allows the first £2,000 of dividend income each year to be taxed at 0% will remain.
If you would like more details about how this will affect you or your business, please get in touch with a member of our tax team:
Email: taxteam@mitchellsaccountants.co.uk
Phone: 01246 274121 Option 2