The government is increasing National Insurance payments from April to fund social care in England and help the NHS recover after the pandemic.
Employees, employers, and the self-employed will pay 1.25p more in the pound for National Insurance (NI) from April 2022.
From April 2023, National Insurance will return to its current rate and extra tax will be collected as a new Health and Social Care Levy. This levy - unlike National Insurance - will also be paid by state pensioners who are still working.
For administrative reasons, HMRC cannot introduce an entirely new tax (with a new tax base) in time for April 2022 which is why the levy will be preceded by the year-long temporary NICs rises.
How much will the tax changes cost us?
Those earning under £9,880 a year won't have to pay National Insurance, or the new levy when it is introduced.
Individuals who earn in excess of £12,875 a year will pay more. For example, an employee with an annual salary of £30,000 will pay an additional £214 a year. Someone earning £50,000 will pay £464 more.
What is National Insurance?
National Insurance (NI) is a tax on earnings that both employees and employers pay. Those who are self-employed pay NI on their profits.
Initially introduced in 1911, National Insurance was designed to provide a fund for workers who lost their jobs, or who needed medical treatment. It is now used to pay for the NHS, benefits, and the state pension.
For further information about the Health and Social Care Levy, visit the government’s website here.
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