National Insurance Contributions and Dividend Tax Rates set to rise
The government have recently announced that both National Insurance Contributions and Dividend Tax Rates will increase by 1.25% from April 2022.
These rises are part of a wider NHS and health and social care recovery plan, which from April 2023 will be known as the ‘Health and Social Care Levy’ (and will be shown on wage slips as such) with working adults above pension age also contributing. The government states that the changes will raise almost £36 billion over the next three years, and will be used to address healthcare backlogs caused by the COVID-19 pandemic.
What is the effect of the increases?
Both employees and self-employed will pay more tax from April 2022. By way of example, the effect of these rate increases is shown below:
National Insurance Contributions
Dividend Tax Rates
When will the changes take place?
From April 2022. Whilst further details are awaited, it is important to note that the rise in Dividend Tax will increase any tax due from 2022/23 onwards.
As soon as we have further information as to the changes, we will update this guidance.
In the meantime, if you have any concerns or would like to discuss this further, please contact your usual Mitchell Charlesworth advisor.
Written 7 September 2021.