The Health and Social Care (HSC) Levy came into effect on 6th April 2022, increasing National Insurance Contributions (NICs) for employers, employees, and self-employed individuals by 1.25 percentage points.
The increase applies to Employer Class 1, Employee Class 1, Class 1A, Class 1B and Class 4 NICs for the tax year 6 April 2022, to 5 April 2023.
In around eight months’ time, NI rates will return to 2021/22 percentages and, instead, the HSC Levy will become a distinct tax.
The levy will be collected through existing PAYE payroll and Self-Assessment systems.
As with any payroll legislation, the expectation is that employers will adapt quickly to accommodate changes and to ensure that compliance does not slip.
To help those impacted to identify whether or not they are required to pay the HSC Levy, HM Revenue & Customs (HMRC) has launched a new interactive online tool, which can be accessed via the guidance pages.
The tool relies on a series of multiple-choice questions to establish your employment status, or indeed whether you are an employer, your level of earnings and your age in relation to the state pension threshold.
This information is then used to determine whether or not the levy applies to you in the tax year 2022 to 2023.
Whether using the tool as an employee, or an employer, once you have answered all the questions you will be redirected to a screen that confirms whether or not you need to pay the charge.
The guidance outlines what you need to do, or what will happen next if you are an employee and encourages users to revisit the guidance to see if the levy still applies from 6 April 2023.
How can GH Payscheme help?
Our BACS-approved payroll bureau supports employers across Bedfordshire, Cambridgeshire, Hertfordshire, and throughout the UK, to remain compliant.
We can assist you with calculating National Insurance Contributions, ensuring that deductions are accurate, and we can support you to communicate key legislative changes to your employees.
Beyond processing your payroll, we can call on the wider team at George Hay to assist you with cash flow forecasting, tax planning and strategic business advice.