From April 2022, the Government plans to create a new social care levy which will see UK-wide tax and National Insurance Contribution (NICs) increases. There will be a 1.25% increase in NICs on earned income, with dividend tax rates also increasing by 1.25%.
The employer will see increased costs–the Employers NI rates increases from 13.8% to 15.05%, and for employees the 12%/2% becomes 13.25%/3.25%.
Tax on dividends can be at 7.5%, 32.5% or 38.1% depending on income levels move to 8.75%, 33.75% or 39.35%.
The self-employed are also hit with an increase in Class 4 NIC on profits from 9%/2% to 10.25%/3.25%.
Any plans to pay dividends after 5 April 2022 to delay the payment of tax liabilities might now need a rethink, and where bonuses are generally paid to staff once accounts have been finalised, a payment of “interim bonuses” prior to 5 April would also save some NI costs.
