No, we are not referring to the BBC programme “This is going to hurt!” – instead we are referring to the Health and Social Care Levy (HSCL) which was announced in the last budget and is coming in from April 2022.

This is a new tax which the government has set up to help fund the NHS.   It is a 1.25% uplift in national insurance contributions to help fund the investment into the NHS, health and social care needed after the effects of the pandemic.  This levy will be collected automatically through increased national insurance contributions as part of the payroll process.

This will be seen in the form of an increase in NICs on the payslips, and employees will notice this on their payslips in April 2022 and going forward. Then next year, from April 2023,  the HSCL will be shown as a separate item on the payslips.

Unfortunately, this means that along with spiralling fuel costs, increased utilities bills, employees will also have higher national insurance contributions and there is nothing that can be done to avoid this.  If your salary is fixed and stays exactly the same from March 2022 to April 2022, the amount of money you take home in April will go down.   This may well generate lots of queries from employees on fixed salaries, although it may be less obvious to those employees on variable or fluctuating pay.

If you employ staff, you may well receive queries about this so this blog is aimed to give you a little more information on the HSCL.

For employees who are ‘Working Age’ (16 or over, but under State Pension age) and employed or self-employed, they will be subject to this increase from April 2022, if they pay Class 1 or Class 4 NIC contributions.

• Class 1 contributions are paid by employees earning more than £184 a week (called the “Primary Threshold”).
• Class 4 contributions are paid by self-employed people earning profits of £9,569 or more a year.

So if employees meet these criteria, then they will notice an increase in the amount of National Insurance deducted from their payslip from April 2022.

Note: If you’re above State Pension age you won’t be affected by the increase for the 2022/23 tax year – so temporary relief here – but you will have to pay it from April 2023.

At a time when most people are “feeling the pinch”, this additional 1.25% cost may well add even more pressure to households already struggling to cover basic essentials.

For those who need more advice, there is help available, with lots of advice online with hints and tips for saving money.  There is also Citizens Advice as well – please see the link below