National Insurance and Dividend Tax Increases – April 2022

In September 2021, the Government decided that it required further income to fund increased health and social care costs. Therefore, they confirmed that certain national insurance contributions (NICs) paid by both employed and self-employed workers will rise by 1.25% from April 2022.

This will then be amended slightly in 2023, when the new ‘health and social care levy’ element will be separated out and the exact amount employees pay will be visible on their pay slips. They also confirmed that it would be paid by all working adults, including workers over the state pension age, unlike other NICs.

Finally, it was also established that UK Dividend tax rates will rise by the same amount from the next tax year as well.

The increases from April 2022 are as follows:

National Insurance

Class 1 Employee – Increase from 12% to 13.25%

Class 1 Employer – Increase from 13.8% to 15.05%

Dividend Tax

Basic Rate – Increase from 7.5% to 8.75%

Higher Rate – Increase from 32.5% to 33.75%

Additional Rate – Increase from 38.1% to 39.35%