The announcements recently, that Class 1 and Class 4 NIC contributions are being raised by 1.25% points would seem to be a fairly straight forward adjustment to payroll software when the change impacts from April 2022.

One would hope that programmers can deal with the change without losing too much sleep…

Then the announcement expanded to advise us that from April 2023, the 1.25% NIC increase was being withdrawn and replaced by a new tax, the Health and Social Care Levy.

This Levy, so we are informed, is the closest we will have to a hypothecated tax – proceeds directed to NHS and social care budgets. 

Accordingly, there will be a new line on payslips, and presumably HMRC will need to identify the Levy content of payments made by splitting payments into three sections: PAYE, NIC and the Levy.

Whilst fairly straight forward, these changes will still need to be factored into HMRC’s and employers’ payroll software.

Obviously, HMRC considers the change fairly extensive in terms of updating their systems, otherwise, would it not have made more sense to introduce the levy from April 2022 and leave NIC untouched?

Source: New feed