From 6 April 2022 National Insurance and dividend rates will be increasing by 1.25%.
Income tax rates on dividends will be increasing from 7.5%, 32.5% and 38.1% to 8.75%, 33.75% and 39.35%. As usual, the rate of tax you pay will depend on your level of income. The dividend allowance of £2,000 remains unchanged.
For National Insurance contributions, employer & employee Class 1, Class 1A, Class 1B & Class 4 contributions will all be increasing by 1.25%. From 6 April 2023, rates of National Insurance will revert back to current rates and there will be a separate Health & Social Care Levy at 1.25%. The contributions raised by the Health & Social Care Levy will be used to help fund the NHS health & social care.
If you are above state pension age, you will not be affected by the increase in National Insurance between 6 April 2022 and 5 April 2023 as you are not liable to make National Insurance Contributions. However, from 6 April 2023, you will be required to pay the 1.25% Health & Social Care Levy if you are employed or self-employed if your income is in excess of the lower profits limit and will be calculated through your tax return.
