From today (6th April), the Health and Social Care Levy comes into effect in the UK, which means the rate of National Insurance contributions you pay will change for one year.
The amount you contribute will increase by 1.25 percentage points which will be spent on the NHS and social care across the UK, to aid this sector in their recovery from the COVID 19 pandemic and the backlog of patients waiting for care and treatment. This extra contribution will see an investment of £39 billion into the health and social care system over the next 3 years, towards reducing waiting times and providing millions more scans, tests and operations.
“We must be there for our NHS in the same way that it is there for us. Covid led to the longest waiting lists we’ve ever seen, so we will deliver millions more scans, checks and operations in the biggest catch-up programme in the NHS’ history.”
– Prime Minister, Boris Johnson
This increase in National Insurance contribution will last the for tax year of April 2022 – April 2023, and will go back down from April 5th 2023, but from 2023 the levy will become a separate new tax of 1.25%. However, there will also be a further change to National Insurance in July 2022, when the amount people earn before they pay NI will be raised to £12,570.
How do these new changes to NI affect you?
- From April 2022, anybody earning more than £9880 per annum will pay 1.25p more in the pound.
However, with the increase in the threshold that someone starts paying a NI contribution from July, anyone earning £34,000 or less per annum will actually pay less NI contribution than the previous tax year (April 2021 – April 2022), but anyone earning more than £34,000 per annum will pay more NI contribution this year.
For example, an employee earning £20,000 per year will pay £178 less in NI in 2022-23 than they did in the previous year but someone earning £50,000 per annum will pay £197 more.
Please see chart for more clarification:
Source: www.bbc.co.uk
So to conclude, if you earn £34,000 or less per annum you will be paying less NI contribution this tax year and if you earn over £34,00o per annum you will pay more NI contribution over this tax year.