National Insurance increase factsheet

As you know, there is an employer and employee National Insurance (NI) increase to provide for the new Health and Social Care Levy Act 2021. Here’s our factsheet on the National Insurance increase. 

From 2022 to 2023, the Health and Social Care Levy will be delivered through a temporary 1.25% increase in the main and additional rates of Class 1 and Class 4 NICs.

These will apply to

• Class 1 (paid by employees)
• Class 4 (paid by self-employed)
• secondary Class 1, 1A and 1B (paid by employers)

How much are National Insurance contributions and what is the National Insurance increase?

Remember that different amounts apply to different employees, depending on employees’ category letters.  Different amounts apply to other categories, for example for under-21s, apprentices, and employees over state pension age. Arrangements are different again for the self-employed.

How will the Levy be collected?

As per usual NI deductions, employers will deduct the levy from employee earnings and will need to pay HMRC via their PAYE payroll systems.

New information for payslips

To coincide with the National Insurance increase, HMRC is asking employers, where appropriate, to include the following message on payslips:

‘1.25% uplift in NICs, funds NHS, health & social care’.

This message is for the payslips of employees who have to pay the increased contribution between 6 April 2022 and 5 April 2023. This is so that they understand what it’s helping to fund.

From April 2023, employers need to report the levy as a new item through Real Time Information (RTI). You will need to show it on payslips as a separate 1.25% levy for employees who have to pay it.

Get in touch if you would like more information or any advice on the National Insurance increase.