The tax increase that isn’t tax (except that it is). So, what do we know about the new Health and Social Care Levy?
- 1.25% paid by the employee;
- 1.25% paid by the employer;
- From April 2022 it will be a temporary increase in Class 1 and Class 1A NIC;
- From April 2023 it will be redefined as a separate levy at the rates above but will include those employees over state pension age;
- It will be available for relief like other employer Class 1 NIC against the employer allowance, and
- It will also be levied on the employer for Class 1A NIC (benefits in kind).
As an employer, it is important to begin factoring in this additional cost to your budgeting when looking at payroll costs and pay increases. If you want any help with numbers do just let us know.
Mitigation is not easy – to stop employing people hardly seems a fair approach. However, if you are not using salary sacrifice arrangements for pension – now might be a time to look at this. As NI goes up, so the savings from this route look even better. Ring and ask for me or Shirl if you want to know more.