WD + Co Autumn Budget Summary 2021 - Flipbook - Page 6
National Insurance Contributions
In September 2021 the government published its
proposals for new investment in health and social care
in England. The proposals will lead to a permanent
increase in spending not only in England but also by
the devolved governments. To fund the investment the
government will introduce a UK-wide 1.25% Health
and Social Care Levy based on the NIC system but ring
fenced for health and social care.
The Health and Social Care Levy Act provides for
a temporary 1.25% increase to both the main and
additional rates of Class 1, Class 1A, Class 1B and Class
4 NICs for 2022/23. From April 2023 onwards, the NIC
rates will decrease back to 2021/22 levels and will be
replaced by a new 1.25% Health and Social Care Levy.
Broadly, the new Health and Social Care Levy
will be subject to the same reliefs, thresholds and
requirements as NIC. However the Levy (as opposed
to the temporary increase in NICs for 2022/23) will also
apply to those above State Pension age who are still in
Existing reliefs for NICs to support employers will
apply to the Levy. Companies employing apprentices
under the age of 25, all people under the age of 21,
veterans and employers in Freeports will not pay the
Levy for these employees as long as their yearly gross
earnings are less than £50,270, or £25,000 for new
The Employment Allowance, which reduces
employers’ Class 1 NICs by up to £4,000, will also be
available for the employers’ liability to the Levy.
A novel aspect of the Levy is the application to
employees above State Pension age. This does
not apply in respect of the temporary increase
for 2022/23. The Levy will not apply to Class 2 (a
flat rate paid by many self-employed) and Class 3
(voluntary contributions for taxpayers to fill gaps in
their contribution records).
The main burden of the 1.25% increase falls on the
collective shoulders of the employer and employee
as each will have higher contributions to make.
Those with property income will be relieved that
they are not being included in the Levy.
National Living Wage (NLW) and
National Minimum Wage (NMW)
Following the recommendations of the independent
Low Pay Commission, the government will increase
the NLW for individuals aged 23 and over by 6.6%
from 1 April 2022. The government has also accepted
the recommendations for the other NMW rates to