A new health and social care levy is being introduced across the UK to help fix a social care crisis that is escalating by the day.
Boris Johnson said National Insurance tax will rise by 1.25% next year and will kick in for working pensioners from 2023, admitting his promise to not raise taxes has been broken.
The tax will begin as an increase in National Insurance from April 2022 and the average earner will see their contributions rise on their payslip to 13.25%.
Sole traders will pay a slightly lower rate of 10.25% from April 2022.
However the levy will then become a separate tax on earned income from 2023.
Instead of being added to standard National Insurance contributions, it will appear on payslips as a ‘health and social care contribution’ from April 2023. That’s a separate tax at 1.25%.
This will be paid by all working adults, including, for the first time, older workers, the government said.
National Insurance typically kicks in on earnings over £9,568, so anyone earning above this threshold will be subject to the tax.
If you have an employer, or you're self-employed but work for an employer, you'll pay Class 1 National Insurance contributions.
The amount you pay on National Insurance is then worked out based on your on gross earnings, before tax or pension deductions, above certain thresholds.
Pam Loch, lawyer at Lock Solicitors, said workers should keep a close eye on their payslips for any discrepancies when the changes come into force in the next tax year.
If you see something you’re unfamiliar with, you can speak to your employer or payroll department for clarity.
If you should not be paying tax because of your earnings, it’s worth speaking to HMRC as you may be registered on the wrong tax code.
“Pay day is always something to look forward to but sometimes things may go wrong or there has been a change which affects your pay,” explains Ms Loch.
“It’s important to check your payslip contains the right information and shows what you expected to see as deductions.
“Legislation requires employers to issue payslips when you are paid so there is transparency over what you have been paid and what deductions have been made for tax, pensions etc.
“If you think your pay has not been calculated incorrectly, it’s important to raise it straight away as a query with HR or with the payroll team/provider.”
If you disagree with the outcome, you can submit a grievance about your pay and ultimately you could bring a tribunal claim if you think you have been underpaid or unauthorised deductions have been made.
How much National Insurance will I pay from April 2022?
To work out the exact amount you will pay, take away £9,568 from your gross salary for the year then multiply this by 1.25%. This will then show you the exact amount you’ll be paying for the year.
- £10,000 salary: £52 paid now; £57 with 1.25% increase - £5 extra each year
- £20,000 salary: £1,252 paid now, £1,382 with 1.25% increase - £130 extra each year
- £30,000 salary: £2,452 paid now; £2,707 with 1.25% increase - £255 extra each year
- £40,000 salary: £3,652 paid now; £4,032 with 1.25% increase - £380 extra each year
- £50,000 salary: £4,852 paid now; £5,357.24 with 1.25% increase - £505 extra each year
