Health and Social Care Levy – Derby Community Accountancy Service

Reversal of Health and Social Care levy

The government is cancelling the Health and Social Care Levy – initially introduced via a 1.25 percentage point rise in National Insurance contributions (NICs) – which took effect in April 2022.
This will be delivered in two parts:
- The government will reduce National Insurance rates from 6 November 2022, in effect removing the temporary 1.25 percentage point increase for the remainder of the 2022-23 tax year;
- The 1.25% Health and Social Care Levy will not come into force as a separate tax from 6 April 2023 as previously planned.
It means 28 million people across the UK will keep an extra £330 a year, on average, in 2023-24.
The government is making this change as quickly as possible, with it coming into force on 6 November.

When will people receive the extra cash?

Most employees will receive the cut in their November 2022 pay directly via their payroll.
Basic rate taxpayers will on average see a gain of approximately £75 in 2022-23 rising to £175 in 23-24. For higher rate taxpayers, these figures are on average approximately £300 in 2022-23 rising to £700 in 23-24. For additional rate taxpayers, the gain will be on average approximately £1,650 in 2022-23 rising to £3,890 in 23-24.
Due to the complexities of some payroll software systems, there will be some people who receive the cut backdated in December 2022 or January 2023.
Although individuals should contact their employer for refunds as a first port of call in all circumstances, there may be circumstances where individuals may need to apply to HMRC for a refund (for example, if their employer is no longer trading, or if an individual has moved roles and their previous employer has confirmed they are unable to issue a refund retrospectively themselves).

Your National Insurance contributions might increase when the Health and Social Care Levy comes into effect in the UK (England, Scotland, Wales and Northern Ireland) on 6 April 2022.

For tax year 6 April 2022 to 5 April 2023

Employer Class 1, employee Class 1, Class 1A, Class 1B and Class 4 National Insurance contributions will increase, for one year, by 1.25 percentage points.

From 6 April 2023

The National Insurance contribution rates will go back down to 2021 to 2022 levels, and the levy will become a separate new tax of 1.25%.

How the levy will affect you

Between 6 April 2022 and 5 April 2023

If you are an employer, employee or self-employed (and below the State Pension age), you will pay the 1.25 percentage points increase in National Insurance contributions.

From 6 April 2023

The separate levy of 1.25% will apply to the same amounts for the following classes of National Insurance contributions:

Class 1 that are above the primary and secondary thresholds
Class 1A and Class 1B for employers
Class 4 for the self-employed

If you’re an employer

If your business pays Class 1, Class 1A or Class 1B National Insurance contributions, you’ll need to start paying the 1.25 percentage points increase in contributions from 6 April 2022. You’ll then need to pay the separate 1.25% levy from 6 April 2023.

You may also have to pay the separate levy from 6 April 2023 for employees who are over State Pension age.

HMRC is asking employers, where appropriate, to include the following message on payslips:

1.25% uplift in NICs, funds NHS, health & social care

Find out more details here