Overview

The Health and Social Care Levy (Repeal) Bill aims to abolish the Health and Social Care Levy, a tax introduced in 2021 to fund the NHS and social care. The bill also makes transitional arrangements to manage the change in National Insurance Contributions (NICs) rates.

Description

This bill repeals the Health and Social Care Levy Act 2021 in its entirety. However, it maintains certain modified National Insurance Contribution (NICs) rates for the 2022-23 tax year to ensure a smooth transition. These transitional rates affect various classes of NICs (Class 1, Class 1A, Class 1B, and Class 4), with specific percentage adjustments detailed in the Schedule to the bill. The bill also includes provisions to allocate the additional NICs collected under the transitional arrangements and to prevent these transitional changes from influencing NICs rates in the 2023-24 tax year. The Treasury is granted the power to make further consequential regulations as needed following the repeal.

Specific Changes to NICs Rates (2022-23):

• Adjustments are made to primary and secondary Class 1 percentages, Class 1A contributions, Class 1B contributions and Class 4 contributions.
• Specific percentage changes are laid out for each class, varying slightly for Great Britain and Northern Ireland. These are complex and depend on the specific type of payment and employment.

Government Spending

The repeal of the Health and Social Care Levy will significantly impact government spending. While precise figures are not explicitly stated in the bill itself, it effectively removes a dedicated funding source for the NHS and social care, potentially leading to reduced funding for these services.

Groups Affected

• Taxpayers: The repeal will eliminate the additional NICs levy, resulting in lower tax bills for most taxpayers. However, transitional NICs rates remain for part of 2022-23.
• NHS and social care services: The repeal will likely lead to reduced funding, potentially affecting service provision and resource allocation.
• Employers: Employers who contribute to NICs will see a reduction in their contributions after the transitional period.
• Employees: Employees will pay lower NICs compared to if the Levy was still in place.
• Self-employed individuals: Self-employed individuals will pay lower Class 4 NICs compared to if the Levy was still in place.

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