Off-payroll working: keeping on top of the changes

A rise in National Insurance contributions in response to the cost of the pandemic will affect both clients and candidates where off-payroll working rules apply, writes our Operations Manager Ilana Samuels.

Following on from the off-payroll working reforms introduced last year which I wrote about extensively here, the Health and Social Care Levy comes into effect next month with another change set for 2023.

From 6 April 2022, National Insurance contributions will increase by 1.25% for both employees and employers. The Government describes this as a “temporary” measure for a single tax year with the increase designed to raise revenue for the NHS and social care across the UK in response to the effects of the pandemic.

For candidates, this change means an increase in employee’s NI deducted from their pay if the off-payroll working rules apply to their role. Meanwhile, clients will see an increase in the employer’s NI charged to them where the off-payroll working rules apply to any interim assignments they have in place. For those interims who contract via an umbrella company, it’s also worth noting this increase will be two-fold, due to both employee’s and employer’s NI being deducted at source by the umbrella company.

Then from April 2023, the Government’s aim is to reduce NI contributions rates back to 2021/22 tax year levels. But this is not in reality a tax cut because a specific new 1.25% Health and Social Care Levy will be applied, with the revenue ringfenced to support UK health and social care bodies.

For a handy snapshot of these changes, take a look at the table below.

How the health and social care levy will apply from April 2022:

	Employee class 1 NICs Main rate / higher rate	Employer class 1 NICs	Self-employed class 4 NICs Main rate / higher rate
NICs rates for 2021/22	12% / 2%	13.8%	9% / 2%
NICs rates for 2022/23	13.25% / 3.25%	15.05%	10.25% / 3.25%
NICs rates for 2023/24 Health and social care levy from 2023/24	12% / 2% 1.25%	13.8% 1.25%	9% / 2% 1.25%

For more information, please contact Ilana Samuels.