Health and social care levy | payslip information on NICs rise from April 2022

A temporary increase in national insurance contributions (NICs) is due to come in on 6 April 2022, with the new Health and Social Care Levy being introduced the following year. HMRC is asking employers to include a message for their employees on all payslips between 6 April 2022 and 5 April 2023 explaining what the funds from the increase in NICs will be used for. 

As set out in our recent Insight, on 7 September 2021 the government announced a new 1.25% Health and Social Care Levy to fund investment in the NHS and social care. 

The levy will be effectively introduced from this April, when national insurance contributions (NICs) for employees, the self-employed and employers will increase by 1.25% and be added to the existing NHS allocation. From April 2023, the levy will be formally separated out from NICs, and NICs rates will return to 2021 to 2022 levels.

To ensure taxpayers understand that their increased contribution is helping to fund public services, HMRC is asking employers to include a message for their employees on all payslips between 6 April 2022 and 5 April 2023 explaining what these funds will be used for. The message should read "1.25% uplift in NICs funds NHS, health & social care".

HMRC has contacted payroll software providers to request that they include this messaging in their software, but HMRC appreciates that some employers will need to make the change directly.

Employers are reminded that that the 1.25% rise in NICs from 6 April 2022 to 5 April 2023 applies to NICs paid by both employers and employees. In addition to the increase in the wage bill on salaries, the overall cost of other payments made to employees (such as bonuses) will similarly increase. The levy will need to be factored into anticipated expenditure from April 2023.

Please get in touch with your usual Osborne Clarke contact or one of the experts below if you have any queries or would like to discuss further.