Overview

The Health and Social Care Levy Bill introduces a new 1.25% tax on earnings and profits subject to National Insurance Contributions (NICs) to fund healthcare and social care across the UK. This levy will be collected by Her Majesty's Revenue and Customs (HMRC) and distributed to the relevant health and social care bodies in England, Wales, Scotland, and Northern Ireland.

Description

The bill establishes a new health and social care levy, a 1.25% tax on earnings and profits typically subject to NICs. This includes earnings above the NICs thresholds, even for those above pensionable age. The levy applies to various categories of NICs (Classes 1A, 1B, 4, and both primary and secondary Class 1). The legislation specifies that existing NICs legislation largely applies to the new levy regarding returns, assessments, collections, appeals, and insolvency priorities, but with some exceptions regarding benefit entitlements and maximum contribution limits. The Treasury can create regulations to clarify the levy's application, including creating reliefs or exceptions, but these must be approved by the House of Commons for certain changes. A temporary increase in NIC rates for 2022-23 is included, before the levy is implemented from April 2023.

Government Spending

The bill does not provide specific figures for the expected revenue generated by the health and social care levy. However, it is designed to raise substantial funds for the National Health Service (NHS) and social care systems across the UK. The money raised will be used to improve health services and social care provision in England, Scotland, Wales and Northern Ireland. The HMRC will deduct its collection expenses before transferring the rest to the Secretary of State.

Groups Affected

• Workers: Most employed individuals will pay the levy through a deduction from their earnings.
• Self-employed individuals: Self-employed individuals will pay the levy based on their profits.
• Employers: Employers will contribute to the levy through secondary NICs.
• NHS and Social Care services: These services will receive the funds raised by the levy to improve their provision.
• HMRC: Responsible for collecting the levy and will incur costs related to its implementation and administration.

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