Health and Social care tax reforms

UK Government announces new Health and Social Care Tax from April 2022

On the 7th September 2021 the UK government announced that a new health and social care tax will be introduced across the UK to help pay for reforms to the care sector and NHS funding. Whilst the new tax will not appear on worker payslips until April 2023, the impact of this new tax will be felt across the UK from April 2022. The aim of the scheme is to help raise £12Bn extra a year through taxation.

What is this tax for?

The tax is being introduced for two primary reasons:

1. To support the cost for health and social care across the UK

2. To raise further funds, in the region of £36Bn over a three-year period, for frontline services due to the impact of the global pandemic on the NHS over the last 18 months

How much is the tax?

It has been announced that the tax will originally be introduced in April 2022 in the form of a National Insurance increase of 1.25% (for both worker and employer)

From April 2023, National Insurance will drop back down to current levels and a new Health and Social Care tax deduction introduced, this will be set at 1.25% of earnings.

When will I start paying the tax?

The impact of the tax will be felt by workers from April 2022, this is when a rise of 1.25% will be added to National Insurance. This rise will impact both worker NI payments and employer NI payments.

From April 2023 National Insurance will be reinstated at its current amount and a new tax category will be introduced onto all worker payslips. This will be in the form of a Health and Social care Tax and will be deducted from a worker’s payslip at 1.25%.

In addition to this any person who receives income from shares will also have an additional 1.25% deducted from share dividends under this scheme.

How much more will I be deducted?

A worker will be deducted 1.25% extra on their taxable earnings.

Who has to pay this tax?

The tax is to be paid by all working adults, older workers, and employers.

How can I find out more?

To find out more about the Health and Social Care tax and how this may impact you,