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1.25% Health & Social Care Levy

21st Mar 2022

Who is likely to be affected

Employers, employees and the self-employed who are liable to pay National Insurance contributions and individuals that would be liable to pay National Insurance contributions were it not for pension age restrictions. (Individuals who only pay Class 2 and Class 3 National Insurance contributions will not be affected)

Why?

This measure provides for a temporary 1.25 percentage point increase to both the main and additional rates of Class 1, Class 1A, Class 1B and Class 4 National Insurance contributions for the 2022 to 2023 tax year and revenue raised will go directly to support the NHS and equivalent bodies across the UK. From April 2023 onward, the National Insurance contributions rates will decrease back to 2021 to 2022 tax year levels and will be replaced by a new 1.25% Health and Social Care Levy where the revenue will be ring-fenced to support UK health and social care bodies.
Individuals above State Pension age will not be affected by the temporary increase to National Insurance contributions for the 2022 to 2023 tax year but will be liable to pay the levy from April 2023.
The new Health and Social Care Levy will be subject to the same reliefs, thresholds and requirements of the qualifying National Insurance contribution (Class 1, Class 1A, Class 1B or Class 4) in respect of which the Levy is payable.

How it will affect your business

Between 6 April 2022 and 5 April 2023, if you are an employer, employee or self-employed (and below the State Pension age), you will pay the 1.25 percentage points increase in National Insurance contributions.

From 6 April 2023
The separate levy of 1.25% will apply to the same amounts for the following classes of National Insurance contributions:

  • Class 1 that are above the primary and secondary thresholds
  • Class 1A and Class 1B for employers
  • Class 4 for the self-employed

All existing National Insurance contribution reliefs will apply to the separate levy for:

  • Employees under the age of 21
  • Apprentices under the age of 25
  • Qualifying Freeport employees
  • Those eligible for the Employment Allowance
  • Armed forces veterans

HMRC will collect the levy through existing PAYE payroll and Self Assessment systems.

Read the full guidance HERE on the GOV.UK website