We are all more than aware of the urgent need for funding amongst the NHS and social care sector. To ensure that these areas receive the money they need, the Government has announced that the new tax, the health and social care (HSC) levy, will rise. This will be charged at 1.25% of the income or profits made by employed and self-employed; however, it will not come into action until the 6th of April 2023 to allow time for the computer systems that collects tax to be adjusted.

Will There Be A Tax Increase Before April 2023?

In the meantime, national insurance contributions (NIC) will increase by 1.25% for all working individuals below retirement age. If you are employed and earn between £9,880 and £50,270 per year, you will pay 13.25% NIC, and then 3.25% above that threshold. Employers will pay 15.05% on all employees’ wages above £9,100 per year.

The above increase in NIC will only apply for 2022-23 and will then be replaced by the HSC levy mentioned above on the 6th of April 2023. The only difference between the two will be that the HSC levy will also apply to those who are still working but over the state retirement age. The Government is hoping that this HSC levy will be shown separately on payslips so that people are aware of how much tax they are paying.

Employers with small payrolls are able to offset up to £4,000 per annum of their employer’s Class 1 NIC against the employment allowance. Unfortunately, it is still unclear whether the employment allowance will cover the HSC levy from the 6th of April 2023.