Prime Minister Boris Johnson announced on 7th September 2021 a new UK wide ‘health and social care levy’ to address the funding crisis in this sector.
The new tax will begin as a 1.25% rise in National Insurance from April 2022:
- The current 12% rate on earnings between £9,564 and £50,268 will rise to 13.25%.
- The current 2% rate on earnings over £50,268 will rise to 3.25%.
- Workers above state-pension age will also contribute to the new levy.
- Employers will also need to contribute an additional 1.25% (employer national insurance is currently 13.8%).
- Anyone earning just under £10,000 will still be exempt.
- From 2023 this will become a separate tax on earned income and the National Insurance increase will appear on payslips as a “Health & Social Care levy”.
- From April 2022 a typical basic rate taxpayer earning £24,100 will contribute £180 which equates to £3.46 per week.
From April 2022 a typical higher rate taxpayer earning £67,100 will contribute £720 which equates to £13.85 per week.
Tax Increase on Dividend Tax Rates
From April 2022 there will also be an increase in tax of 1.25% on income received from share dividends, which will include company directors in receipt of dividend income from a company shareholding.
A basic rate tax payer is currently paying tax at a rate of 7.5% on dividend income and from April 2022 this will increase to 8.75%. A higher rate tax payer is currently paying tax at a rate of 32.5% and from April 2022 this will increase to 33.75%. An additional rate tax payer is currently paying tax at a rate of 38.1% and from April 2022 this will increase to 39.35%.