Yesterday the Government announced a new Health & Social Care Levy

Those who wish to read the details – so far as they are available – can do so here:

The Levy will effectively be introduced from April 2022, when NICs for working age employees, self-employed and employers will increase by 1.25%. All rates of dividend tax will also increase by 1.25% from April 2022 also. From April 2023, once HMRC’s systems are updated, the 1.25% Levy will be formally separated out and will also apply to individuals working above State Pension age, and NICs rates will return to their 2021-22 levels. Please see below for a table that summarises the position.

Revenues generated by this levy will be ring fenced for health and social care.

The announcement pushes taxes to their highest-ever sustained share of the economy.

This new third tax on earned income adds to an already complex system and will further distort the consequences of employment v self-employment.

The self-employed are already taxed more lightly than employees because there is no equivalent of employer NICs levied on the self-employed.

This Levy will see that gap grow.

The combined NICs rate on employment income (including employer NICs) will rise from 22.7% to 24.6%.

The rate on the self-employed will rise from 9% to 10.25%.

 

Comment from the Director’s desk:-

This further complicate the age-old question of what is the best medium through which those in business, on their own account, should trade.  So please do contact us for tailored advice in this regard.  Also, we can assist with determining the financial impact both actually and on financial projections, if say you are planning to upscale your work force over the next 6 months or are working to Budgets that extend beyond April 2022

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THIS ARTICLE WAS WRITTEN BY

The England and Company Team

The England and Company Team

Our experts include: Chartered Certified Accountants, Chartered Tax Advisors and Registered Auditors.

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