Increase in Employment Costs from April 2022
Health and Social Care Levy from April 2023:
The new Health and Social care Levy will be a 1.25% tax on earnings for employees, the self-employed and employers. It will tax earnings in the same way as National Insurance contributions (NICs), except that it will also apply to the earnings of those over state pension age.* It will come into force in the tax year starting in April 2023.
Temporary increase to National Insurance from April 2022 to the end of the tax year:
Before the levy is introduced all three rates of NICs will increase by 1.25 % in April 2022.
The National insurance increase has the same effect as the levy, except that it will not apply to earnings over state pension age. National insurances rates will return to their current levels in April 2023, when the levy comes into effect.
Increase in the national minimum wage:
This is in addition to the increase in the National minimum wage the new rates are shown below
What does this all mean for my direct payments?
From April 2022 it will be important to take into account the increased employers cost in your direct payment budget caused by the increase in National Insurance / Health and Social Care Levy. You should also note that your employees will also have an increase to their National Insurance costs, so they may notice a reduction in their NET pay.
You will also be required to make sure that your employees receive at least the National minimum wage as an hourly rate.
If you are concerned that your budget will not cover the increased costs please contact your Funding body or support worker for confirmation of how this will be addressed in the funding for the 2022/23 tax year.
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