National Insurance and Dividend Tax Increase – April 2022
The government has announced that starting in April 2022, National Insurance contributions are to rise by 1.25% to fund social care costs.
National Insurance Contributions will increase by 1.25% from April 2022 for employees, employers & self employed. Those above state pension age will not be affected.
From April 2023, this extra 1.25% will be re-named as ‘Health & Social Care Levy’ and will remain as 1.25%. This will now be deducted from those above state pension who are employed or self employed with earnings above £9,568.
These changes will be administered through payroll for employees and through personal tax returns for the self employed.
The tax rate for dividends will also increase by 1.25% from April 2022.
How The Health and Social Care Levy Applies From 2022 |
| Employees Class 1 NICs
Main Rate / Higher Rate | Employer Class 1 NICs | Self-Employed Class 4 NICs
Main Rate / Higher Rate | |
|---|---|---|---|
| NICs rates for 21/22 | 12% / 2% | 13.8% | 9% / 2% |
| NIC rates for 22/23 | 13.25% / 3.25% | 15.05% | 10.25% / 3.25% |
| NIC rates from 23/24
Health and Social Care Levy from 23/24 | 12% / 2%
1.25% | 13.8%
1.25% | 9% / 2%
1.25% |
| Threshold at which NICs become payable in 21/22 | £9,568 | £8,840 | £9,568 |
Dividend Tax Rates and Changes From 2022 |
| Basic rate taxpayers | Higher rate taxpayers | Additional rate taxpayers | |
|---|---|---|---|
| Dividend tax rates for 21/22 | 7.5% | 32.5% | 38.1% |
| Dividend tax rates from 22/23 | 8.75% | 33.75% | 39.35% |
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