Health and Social Care levy – how will it work? 

Dec, 2021

On 7th September 2021, the government announced a new 1.25% Health and Social Care Levy to fund the NHS and social care. The levy will be effectively introduced from April 2022 when National Insurance Contributions (NICs) for working-age employees, self-employed individuals and employers will increase by 1.25% and be added to the current NHS allocation.

Please see the table below released by GOV.UK which shows the increased cost to employees.

The increase will result in an extra £130 being paid by an employee earning £20,000 a year, and on a salary of £50,000, the additional payment will be £505.

Those earning less than £9,564 a year, or £797 a month, will not be required to pay National Insurance.

From April 2023, the levy will be formally separated from NICs, and applied to the earnings of individuals working above State Pension age. NIC rates will then return to 2021-22 levels.

Payslip guidance

To ensure taxpayers recognise that their increased contribution is supporting public services, we encourage all employers to send out a communication to their employees or clients highlighting this change. This should help employees to gain a better understanding of the uplift, detailing what their increased NICs will be used for.

HMRC are asking employers and payroll agents, where possible, to add a message onto payslip templates. The message applies to all payslips for the tax year 2022-23 and should read “1.25% uplift in NICs funds NHS, Health and Social Care”.

Qtac allows users to add a message onto employees’ payslips. To understand how to add a default payslip message, click here.

December Employer Bulletin

HMRC has released its December edition of the Employer Bulletin, this provides all the latest HMRC updates and guidance to support employers and payroll agents. The December bulletin requests that employers include this message on employees’ payslips starting from April 2022.