NICs set to rise

National Insurance

A new health and social care tax is being introduced to boost funding for the NHS and social care, Prime Minster Boris Johnson announced yesterday (7th September)

 

Employees and the self-employed will initially pay an extra 1.25% in National Insurance contributions (NICs) from April 2022. 

 

From April 2023, this rate will remain in place but in the form of a ‘health and social care levy', at which point state pensioners who continue to work will also pay the levy.

 

Employees currently pay 12% in Class 1 NICs on earnings between £9,568 and £50,270, and 2% on earnings above that, while employers pay a flat rate of 13.8%.

 

The self-employed will also see Class 4 NICs rates rise, with the main rate of 9% increasing to 10.25% and the higher rate from 2% to 3.25%.

 

The increase in NICs stands to generate an additional £12 billion for health and social care.

 

The Chartered Institute of Taxation (CIOT) said that bringing state pensioners into scope of the new levy might be setting a precedent for the future.