Health and Social Care Tax

On 7^th September, the PM announced that they will be increasing taxation to support the plans for health and social care.

Which means there will be a rise in both employees and employers National Insurance Contributions (NIC) of 1.25%.

This also applies to the self-employed and is mirrored with a 1.25% increase in the dividend tax. All of which will come into effect from 6^th April 2022. For companies, this comes on the back of the planned increase in Corporation Tax from 19% to 25% in April 2023.

We hope that the increases in National Insurance, Dividend Tax and Corporation Tax will be the final increases, but we can't help feeling that we're being warmed up for more increases further down the line. 

Time will tell but for now, we wanted to illustrate the effects on the increase on various people/businesses. We have assumed all other allowances stay the same and if the increases in National Insurance and Corporation Tax took effect now.

The increases apply to Employers National Insurance so the tax burden on employing staff increases from 13.8% to £15.05% from April 2022.

Self-employed individuals

Limited Companies

We have based this on a company with two shareholders receiving dividend income capped at £100,000, split equally and an annual salary avoiding paying Employers National Insurance.

And now with the planned increases:

We know that some of you may have different scenarios to these, but it just highlights the effect of the increases.

We are here to aid you and there are various things that can be done before these increases take effect, so please contact us.