Legislation has been approved to increase National Insurance contributions beginning in April 2022. Class 1, Class 1A, Class 1B and Class 4 will temporarily increase by 1.25% for the 2022-2023 tax year. Individuals who only pay Class 2 or Class 3 contributions will not be affected.
The increase to National Insurance contributions is expected to raise approximately £14 billion per year, and a recent study shows that about 40% of the revenue will come from employer contributions. After April 2023, the NIC contribution rates will decrease back to 2021-2022 levels but will be replaced with the new Health and Social Care Levy increase of 1.25%.
The revenue raised by the Health and Social Care Levy will fund health and social care across the UK and provide the government means to support increase in spending instead of borrowing and accruing more debt.
Managing the new increases to National Insurance contributions can be challenging, especially with changes occurring again next year. It’s important to prepare your payroll team for the changes and ensure compliance with the new contributions. Our team is CIPP-certified to help when questions come up and can guide you through the process to make sure your payroll is ready for the changes.
With cloud-based payroll software and direct filing with HMRC, Payescape provides the resources and tools you need to ensure compliance with new regulations. Never miss a deadline and simplify payroll for your team. Talk to us today to get started!
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