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Health and Social Care levy

What is the Health and Social Care Levy?

The Health and Social Care (HSC) levy is a new and additional type of personal income tax. The main way it’s funded is from earnings, this will be deducted via PAYE in the case of full-time employees.

The HSC levy is a new and permanent tax intended to pay for increasing NHS costs, plus the increased costs of adult social care.

This change is being introduced to help the NHS and Social Care recover from the Coronavirus pandemic. 

Changes from April 2022

National insurance contributions (NICS) are increasing by 1.25% for one year only for employees, employers and the self-employed. 

This covers both Class 1 - employee and employer, Class 1A and 1B and Class 4 - self-employed contributions. Those above state pension age aren't impacted by the April 2022 changes.

The rate of income tax for people who receive dividend income from shares is also increasing by 1.25%.

National Insurance rises

The table below shows the current NICs based on an employees salary, and also the increased amount from April 2022.

Salary (£) Current NICs (£) NICs from April 2022 (£) Increase (£)
20,000 1,252 1,382 130
30,000 2,452 2,707 255
40,000 3,652 4.032 380
50,000 4,852 5,537 505
60,000 5,079 5,709 630
100,000 5,879 7,009 1,130

Changes from April 2023

HMRC will collect the extra tax as a new Health and Social Care Levy and 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.

Levy contributions will apply UK-wide, and like national insurance, people will pay the same in England, Scotland, Wales and Northern Ireland.

What do you need to do? 

Nothing at all, we've got you covered! We'll include the NI contribution categories and tables in a future release of Sage Business Cloud Payroll.

Payslip comments

With this NIC announcement, HMRC are requesting where possible, employers and payroll agents should put a message on payslips for the Tax year 2022-23 explaining what these funds will be used for. Message should read:

1.25% uplift in NICs funds NHS, health & social care.

Within SBCP we have you covered and a new feature will be available which will include this default message on each employee and you can update\remove if not applicable for your business. Please remember though this message should only appear on payslips from the start of the new Tax year.

Further information

For more information around the Health and Social Care Levy changes, visit the government website.

If you'd like further information about legislation and how they effect you, why not take a look at our legislation hub or blogs?