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Health and Social Care Levy: Will the proposed NIC rise go ahead?

The government is facing renewed pressure to scrap the planned NIC rise which is set to go ahead in April. In this article, we look at how the increase will affect workers, and the latest news around the rise.

Rising costs causing widespread concern

The cost of living has been causing concern for many months, with the impact of the covid pandemic creating uncertainty for both individuals and businesses. Soaring energy costs have hit the headlines repeatedly, as the world is still recovering from the economic impact of the covid pandemic. And while the crisis in Ukraine has so far led to increased fuel prices, there are no guarantees that there won’t be further effects from the conflict.  This means that many households are facing a desperate financial crunch in the months to come.

As a result, many groups are putting pressure on the government to back down from the planned NIC rise which is due to come into force this April. But having announced the Health and Social Care Levy back in December 2021, the government is so far remaining steadfast in their decision. 

The levy, which is described as a “temporary” 1.25 percentage point increase on both workers and employers National Insurance, will see employees on a salary of £20k paying an additional £130 a year. The Levy is designed to help fund the NHS and provision of care homes and personal care for those with disabilities and additional needs. 

But the levy is going to be particularly expensive for workers who are employed under an umbrella model, who pay both employer and employee NIC’s, those of whom will see a 2.5% increase.

Feeling the pinch

The best solution is for the NIC increase to be passed on to end-hirers in the form of enhanced day rates which will cover the rise, but with everyone feeling the pinch of higher prices from every angle, any escalating rates will likely be received unfavourably.

With the labour market already struggling to find and retain staff, employers would do well to be working to hold onto their staff. Those who work with umbrella contractors should ensure that they are aware of the rise and help them find ways of preparing for it. And contractors who are in any doubt whatsoever about how the changes will affect them should talk to their umbrellas about what to expect.

Days away from a final decision?

The Spring budget is due on 23rd March, and this has been regarded by many as the final chance for the Chancellor to withdraw the planned rise. But despite the passing of a last minute symbolic non-binding motion put forward by the opposition, the government remains steadfast, with Treasury minister Lucy Frazer saying that the government “will press ahead” with the planned rise.

Supporting you

We at JMK recognise that everyone is going through a tough time right now, that’s why we offer several ways to support our clients and contractors. Talk to us today about our forecaster tool, which will help you prepare for your payroll needs going forward, despite the uncertainty. 

We are of course monitoring the situation with the NIC rise closely and will keep our clients and contractors informed with up to the minute advice based on the latest developments. In the meantime, don’t hesitate to reach out to our team if you have any questions!

HOW JMK CAN HELP YOU

Since 2002, JMK have been compliantly consolidating back-office, accountancy and payroll functions. 

We have evolved to provide a range of expert services; such as Back Office Support (BOS) or Funding, becoming a leading provider to the contracting industry.

We know every agency is different in some shape or form, even if only by a little, but important bit. Combining our knowledge and experience of multiple sectors enables JMK to support you all from recruiters and payroll, through to finance, compliance and management.

With JMK as your trusted partner, even the smallest team can process the largest payroll, regardless of payroll type.

Have a look at the wide range of services our Back Office Support (BOS) or Funding can provide to you and your business, it is far more than just payroll and finance.

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