The tax increase has been created by the Government to combat the NHS backlog. It will also fund social care initiatives, such as care home costs and disease prevention.
From April 2022, National Insurances contributions will rise by 1.25% for employees and the self-employed who earn over the minimum threshold. Employers NI contributions will also be increased by 1.25%.
The increase to NI contributions will only last 1 year, with rates returning to the current level in April 2023. However, the 1.25% tax is here to stay and will be known as the ‘Health and Social Care Levy’ from 2023.
The government has announced several tax increases on contractors and employees as it looks to bridge the funding gap in health and social care.
From April 2022, National Insurance Contributions (NICs) for employees and employers will increase by 1.25% along with a matching increase in the tax paid on dividends.