As we have been hearing in the news recently, the Health and Social Care Levy is being introduced from April 2022.
What does it mean for your take home income?
You will be taking home less salary each month if you are an employee. If you are self-employed, your tax bill in January 2023 will be increased. If you receive dividend income, you will pay more tax on it when you submit your tax return.
How much extra will I have to pay?
The additional amount of tax to be charged is 1.25%. Here are a few examples of how much you may pay, per annum:
1. Annual salary of £20,000: additional annual levy cost is £89
2. Annual salary of £30,000: additional annual levy cost is £214
3. Annual salary of £50,000: additional annual levy cost is £464
4. Annual salary of £80,000: additional annual levy cost is £839
5. Annual salary of £100,000: additional annual levy cost is £1,089
Will this show on my payslip?
From April 2022, the levy will simply be shown as an increase in the National Insurance you have paid. The increase will not be shown separately.
From April 2023, you will see a separate line on your payslips for the Health and Social Care Levy.
Will everyone pay the levy?
If you are 16 or over, but under state pension age, you will be subject to the levy on your employment income and your self-employment profits. However, from April 2023, as this will be a separate levy and not an increase in National Insurance, those over state pension age who receive a salary or have taxable self-employment profits will also be paying the additional 1.25% of the Health and Social Care Levy.
Please always seek professional advice before taking any action. We are happy to answer questions in future issues. Please send your questions through the Contact Us page on our website.