Funding social care
Parliament has approved controversial plans to increase rates of national insurance in order to pay for the impact of the COVID-19 pandemic on the NHS and to address the funding gap for health and social care. Those charities employing staff will be hit by these changes, as will be their staff.
From 6 April 2022 there will be a temporary 1.25% increase in Class 1 national insurance contributions payable by employees earning more than the primary threshold, which is currently £9,568 in 2021/22. Employer contributions will also be increasing by 1.25% on earnings above the secondary threshold, currently £8,840. This increase also applies to any Class 1A or Class 1B contributions payable on benefits and PAYE settlements. This temporary increase will last for a year, when it will be replaced by a new health and social care levy. HMRC estimates that the impact on an individual earning the median basic rate taxpayer’s income of £24,100 will be an additional £180 a year.
Charities will need to budget for these changes coming in next year which has the potential to significantly increase payroll costs. Looking further ahead they will also need to ensure that their payroll systems are ready to handle the health and social care levy when it is introduced.