The new Health and Social Care Levy (HSCL), which was announced by the Prime Minister on 7 September 2021, is designed to generate an additional £12 billion a year for the NHS and social care across the UK.
To fund this, an increase of 1.25% will be applied to National Insurance Contributions (NIC) for 1 year from in April 2022. It will be added to both employee and employer Class 1 NIC, as well as Class 1A, Class 1B and Class 4 NIC. From April 2023 the 1.25% HSCL will be applied separately and NIC will revert to 2021/22 rates.
HMRC will apply the levy to those who earn more than £9,568 a year through Pay As You Earn and Income Tax Self-Assessment, and it should appear as a separate item on payslips from 2023.
Those in work who are above the state pension age will pay the new levy from April 2023, when it is applied separately, but not in 2022/23 when it is included within NIC.
Also, from April 2022 a 1.25% increase will be applied to income tax for those who receive dividend income from shares.