Overview

The Health and Social Care Levy Bill introduces a new 1.25% tax on earnings and profits subject to National Insurance Contributions (NICs). This tax will fund health and social care services across the UK, with the revenue distributed among the four nations.

Description

This bill creates a new tax, the "health and social care levy," levied at a rate of 1.25% on earnings or profits already subject to, or that would be subject to, NICs if pension age restrictions didn't apply. The levy covers various types of NICs (Classes 1A, 1B, 4 and primary/secondary Class 1). Existing NICs legislation largely applies to the levy, including regulations regarding returns, assessments, and appeals. The Treasury can issue regulations to define reliefs or exceptions, and these regulations are subject to parliamentary approval under certain circumstances. A temporary increase to existing NIC rates was implemented for the 2022-23 tax year to generate revenue in advance of the new levy's introduction in April 2023. This temporary increase will be disregarded in future calculations of NIC rate alterations. The levy's proceeds, less collection costs, are payable to the Secretary of State for allocation to healthcare and social care across England, Wales, Scotland, and Northern Ireland, with the allocation shares determined by the Treasury.

Government Spending

The bill is projected to significantly increase government spending on health and social care services. While exact figures weren't provided in this specific bill text, the 1.25% levy is designed to generate substantial additional revenue for these services across the UK.

Groups Affected

• Workers and Employers: Workers will pay the levy on their earnings (similar to NICs), increasing their tax burden. Employers will also pay a portion of the levy based on employee earnings.
• Self-Employed Individuals: Self-employed individuals will pay the levy on their profits.
• NHS and Social Care Services: These services will benefit from increased funding, potentially leading to improvements in care and resources.
• HMRC: HMRC will be responsible for collecting the levy, incurring administrative costs.
• Treasury: The Treasury will determine the distribution of funds across health and social care and among the four nations.

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