18th March 2022
The Government have announced changes to the rates of National Insurance and Dividend Taxes to fund NHS and Social Care. The changes commence on 6th April 2022 and affect the tax year 2022/23 only. The increase will be 1.25% on top of current levels.
From 6th April 2023, the rates will revert back to current levels and a new Health and Social Care Levy will be introduced at a rate of 1.25%. It is important to note that those individuals reaching State Pension age will continue to pay this new levy even though National Insurance contributions cease.
The changes to National Insurance are planned as follows: –
Class 1 Employee National Insurance 12%
Class 1 Employer National Insurance 13.8%
Class 1A Employer National Insurance 13.8%
Class 1B Employer National Insurance 13.8%
Class 4 Self-employed National Insurance 9%
Class 1 Employee National Insurance 13.25%
Class 1 Employer National Insurance 15.05%
Class 1A Employer National Insurance 15.05%
Class 1B Employer National Insurance 15.05%
Class 4 Self-employed National Insurance 10.25%
Class 1 National Insurance and Class 4 Self-employed National Insurance become due when income exceeds £9,880 per tax year. Please note that Class 2 and Class 3 National Insurance will remain unchanged.
Dividend tax changes
In relation to dividends, the dividend tax allowance remains unchanged at £2,000 per year. The tax rates however change to the following: –
Dividend ordinary rate 7.5%
Dividend upper rate 32.5%
Dividend additional rate 38.1%
Dividend ordinary rate 8.75%
Dividend upper rate 33.75%
Dividend additional rate 39.35%