Increases in National Insurances and Dividend Tax

The UK Government has announced plans for a 1.25% increase in National Insurance contributions and Income tax on dividends. The increases are intended to raise around £36 billion over three years. The increase is intended to fund the NHS and Social Care. The effective start date is April 2022. The increases were passed by Parliament and from April 2023, the National Insurance increase will be shown as the ‘Health and Social Care Levy’ and will appear as a separate line on employees’ payslips.

National Insurance increase from April 2022

From April 2022 National Insurance contributions will increase by 1.25% for both employees and employers (i.e. 2.5% in total).

The increase will apply to:

· Primary Class 1 National Insurance: paid by employees

· Secondary Class 1 National Insurance: paid by employers

· Class 4 National Insurance: paid by self-employed

Dividend increase from April 2022

From April 2022 tax on dividend income will increase by 1.25%.