The Heath & Social Care Levy

The health and social care levy will take affect from April 2022. It will fund the NHS and social care in the coming years by requiring an increase in National Insurance contributions (NICs) from both employers and employees.

It will be introduced as a temporary measure for tax year 2022/23, and then will be permanent from tax year 2023/24 onwards. At that point, it will be identified as a separate deduction compared to income tax and NICs.

What is the health and social care levy?

At the heart of the levy is a 1.25% increase from both employee and employer, making for an effective 2.5% contribution per employee.

The levy is implemented as follows:

6 April 2022 to 5 April 2023

• Employers NICs: 1.25% increase in Class 1, 1A and 1B National Insurance Contribution (NIC) rates, taking them up to 15.05% (from 13.8% currently).
• Employee NICs: 1.25% increase in Class 1 NIC rates. This takes the rate up to 13.25% for earnings below the NIC Upper Earnings Limit (from 12% currently), and to 3.25% above that limit (from 2% currently).

6 April 2023 onwards

• The Health and Social Care (HSC) Levy will be a new PAYE contribution that runs alongside NICs and is administered in an almost identical way. Both employee and employer will pay 1.25%, making for an aggregate of 2.5% per individual. The difference with the April 2023 levy is that it will be differentiated on the payslip as a separate permanent deduction.

How does the health and social care levy affect employees?

Each employee earning more than the Primary Threshold and under State Pension age will see an additional 1.25% of their gross eligible income deducted via PAYE as of April 2022.

How does the health and social care levy affect employers?

Employers will pay an extra 1.25% on all eligible employee’s earnings over the NI threshold.

Relief regarding employees aged under 21, apprentices under 25 and Employment Allowance will still be in place for employers.