Heath and Social Care levy – What we know so far
08 September 2021
Following on from the announcement made by Prime Minister, Boris Johnson, on 7 September 2021, further details have been published on how a new Health and Social Care Levy will be operated.
Tax year 2022-2023
It has been confirmed that for the tax year 2022-23 the levy charge of 1.25% will be a collected under the deduction of National Insurance Contributions (NIC).
For employees, this means that NICs will be collected at a rate of 13.25% calculated on earnings above the Primary Threshold (PT) up to the Upper Earnings Limit (UEL). The percentage applied above the UEL will also be increased to 3.25% (previously 2%).
For employers, Class 1 NICs will increase to 15.05% on earnings above the Secondary Threshold (ST). In addition, an increase of 1.25% will also be attributed to Class 1A and 1B NICs.
Employers are encouraged to include a generic message on payslips, to show that the increase in NICs relates to the Health and Social Care Levy.
The self-employed will also see an increase to their Class 4 contributions, with the main rate increasing to 10.25% and higher to 3.25%.
Tax year 2023 onwards
From April 2023, a new isolated Health and Social Care Levy of 1.25% will be introduced which will apply to both employer and employee Class 1 NICs, Class 1A and 1B (for employers) and Class 4 (self-employed) NICs.
In addition to this, the levy charge will also be expanded to those over the State Pension Age who are in employment.
NIC rates will revert to the 2021-2022 levels once the new levy charge comes into flourish.
With the addition of this new deduction, employers will need to ensure that this is expressed as a separate element on the employee’s payslip.
| Employee Class 1 NICs | Employer Class 1, 1A & 1B NICs | Self Employed Class 4 NICs | |
| Tax Year 2021 - 2022 | 12% / 2% | 13.8% | 9% / 2% |
| Tax Year 2022 - 2023 | 13.25% / 3.25% | 15.05% | 10.25% / 3.25% |
| Tax Year 2023 - 2024 | 12% / 2% | 13.8% | 9% / 2% |
| Employee | Employer | Self-Employed | |
| H&SC Levy 2023 - 2024 | 1.25% | 1.25% | 1.25% |
What are your thoughts?
The CIPP’s policy and research team would like to hear your thoughts on the introduction of this new deduction. With salary sacrifice schemes offering National Insurance (NI) savings, will this influence your reward packages going forward? For example, will salary sacrifice pension schemes be promoted? Or cycle to work schemes introduced?
Please send your thoughts and comments to [email protected]. Thank you in advance.
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