What's new to national insurance and tax?

With the recent announcement from the Government around new NIC and tax changes, all medical practices need to consider how these could impact their operations, what are their options and how best to plan ahead.

National Insurance

The Government recently announced that National Insurance Contributions are going up by 1.25%. That means from 6 April 2022, everyone in employment or self-employment will pay an extra 1.25% on earnings above £9,880.

Employers will also pay an additional 1.25% on your Employers National Insurance bill raising this rate to 15.05%.

From 6 April 2023, the National Insurance rates return to current levels, the additional 1.25% mentioned above will then be a separate levy called the ‘Health and Social Care Levy’.

Dividend Tax Rates

Another change that has had much less mention in the press is the change to the dividend tax rates also coming into force from the 2022/23 tax year. These are also all going up by 1.25%. This means the dividend tax rates are going to take a bit of remembering as they change to 8.75%, 33.75% and 39.35%. Still lower than income tax rates but sneaking up all the time. Unlike the National Insurance changes, this will affect all individual shareholders not just working people (plenty of retired people have dividend income), subject to their dividend income exceeding the dividend allowance.

Planning

Doctors will see an increase in their personal national insurance costs from 2022/23. Employees will notice it in their payslips as soon as April 2022. Self-employed doctors will see a delay until the self-assessed tax and NI is payable for that year with the full impact being felt in January 2024 tax payment.

Medical practices will see a sizeable rise in their employer’s national insurance payments from April 2022. For NHS practices we will need to see if any new funding comes through in the 2022/23 contracts.

How we can help

If you’d like further information on any subjects discussed in this article, please don’t hesitate to get in touch via the form below.

Back to Autumn 2021 update

Healthcare news - Autumn 2021

In Autumn’s healthcare update, we have a look into annual allowance, the frequently asked questions around this subject and what the recent increased CPI inflation rate means for NHS pensions and tax.