National Insurance and Dividend Tax Increase – April 2022

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The government has announced that starting in April 2022, National Insurance contributions are to rise by 1.25% to fund social care costs.

National Insurance Contributions will increase by 1.25% from April 2022 for employees, employers & self employed. Those above state pension age will not be affected.

From April 2023, this extra 1.25% will be re-named as ‘Health & Social Care Levy’ and will remain as 1.25%. This will now be deducted from those above state pension who are employed or self employed with earnings above £9,568.

These changes will be administered through payroll for employees and through personal tax returns for the self employed.

The tax rate for dividends will also increase by 1.25% from April 2022.

How The Health and Social Care Levy Applies From 2022

Employees Class 1 NICs

Main Rate / Higher Rate

Employer Class 1 NICs

Self-Employed Class 4 NICs

Main Rate / Higher Rate

NICs rates for 21/22

12% / 2%

13.8%

9% / 2%

NIC rates for 22/23

13.25% / 3.25%

15.05%

10.25% / 3.25%

NIC rates from 23/24

Health and Social Care Levy from 23/24

12% / 2%

1.25%

13.8%

1.25%

9% / 2%

1.25%

Threshold at which NICs become payable in 21/22

£9,568

£8,840

£9,568

Dividend Tax Rates and Changes From 2022

Basic rate taxpayersHigher rate taxpayersAdditional rate taxpayers
Dividend tax rates for 21/227.5%32.5%38.1%
Dividend tax rates from 22/238.75%33.75%39.35%

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