National Insurance, Dividend Tax, and the Health and Social Care Levy

Update as of 17th October 2022

On 23rd September 2022 the government announced plans to reverse the increase to National Insurance to previous levels, taking effect from 6th November 2022. The planned introduction of a separate Health and Social Care Levy from April 2023 will also be scrapped.

This means that the additional 1.25% on National Insurance rates will no longer apply.

The original increase also affected dividend tax rates. A further statement made by Jeremy Hunt on 17th October 2022 confirmed that the increased rate of dividend tax would not be reversed.

Class 1 (Primary) National Insurance – Employees

	2022/23 Weekly Threshold	2022/23 Annual Threshold	2021/22 Weekly Threshold	2021/22 Annual Threshold
Lower Earnings Limit (LEL): Employees earning less than this limit won’t incur NI, but they also won’t accrue NI benefits such as qualifying payments towards their State Pension.	£123	£6,396	£120	£6,240
Primary Threshold: This is the point at which employees start paying NI on any earnings above the threshold. Earning below this, but above the Lower Earnings Limit still doesn’t incur NI, but employees will earn NI ‘credits’, and accrue NI benefits. In 2022/23 the National Insurance Primary Threshold will increase during the tax year.	6th April 2022 – 5th July 2022 £190	6th April 2022 – 5th July 2022 £9,880	£184	£9,568
	6th July 2022 onwards £241.73	6th July 2022 onwards £12,570	£184	£9,568
Upper Earnings Limit (UEL): Earnings above the Primary Threshold up to (and including) the Upper Earnings Limit incur NI at the following rates: 2021/22: 12% 2022/23 6th April – 5th November: 13.25% 6th November onwards: 12% 2023/24: 12%	£967	£50,270	£967	£50,270
Earnings above the Upper Earnings Limit: incur NI at: 2021/22: 2% 2022/23: 6th April – 5th November: 3.25% 6th November onwards: 2% 2023/24: 2%	£968 and above	£50,271 and above	£968 and above	£50,271 and above

Class 1 (Secondary) National Insurance – Employers

As an employer you’ll need to deduct your employees’ contributions, and pay them to HMRC alongside your contributions as their employer.

2022/23
Weekly Threshold

2022/23
Annual Threshold

2021/22
Weekly Threshold

2021/22
Annual Threshold

Secondary Threshold: On salary payments above this threshold employers pay NICs at a rate of:

2021/22: 13.8%

2022/23:
6th April – 5th November: 15.05%
6th November onwards: 13.8%

2023/24: 13.8%

£175

£9,100

£170

£8,840

Class 4 National Insurance – Self-Employed People

The Health and Social Care Levy would also have affected Class 4 National Insurance, which is paid by self-employed workers. It wouldn’t have affected Class 2 NI, or voluntary Class 3 contributions. You can read more about National Insurance rates and thresholds in our UK tax rates article.

	2022/23 Annual Threshold	2021/22 Annual Threshold
You won’t pay NI on profits you make from self-employment, but you can make voluntary contributions to fill any gaps in your NI record.	£0 – £6,724 No contributions to pay, but you will earn NI credits	£0 – £6,514
Small Profits Threshold (SPT): From April 2022 you will no longer pay Class 2 NI on any self-employed profits you earn between this and the Lower Profits Limit (LPL), but you will continue to build up National Insurance credits.	£6,725 No contributions	£6,515 £3.05 per week
Lower Profits Limit (LPL): From April 2022 this is the point at which you’ll start paying both Class 2 and Class 4 NI. The threshold changed in July 2022, so this year uses an ‘annualised’ amount.	£11,908 Class 2 NI: £3.15 per week Class 4 NI: 10.25%	£9,568 Pay Class 4 NI at a rate of 9%
Upper Profits Limit (UPL): The profits you make from self-employment incur Class 4 NI at a slightly different rate above this threshold.	£50,270 Class 4 NI at 3.25%	£50,270 Class 4 NI at 2%

What the changes mean for dividend tax

The government announced in the September 2022 mini-budget that scrapping the levy would also mean dividend tax rates would return to their previous levels as of April 2023. A subsequent statement made by Jeremy Hunt on 17th October confirmed that this reduction would not go ahead. Dividend tax rates will stay at this year’s level.

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