Health & Social Care Levy

Key facts

A 1.25 percentage point NI increase took effect in April 2022, intended to fund health and social care.
The plan was to separate this into a standalone Health and Social Care Levy from April 2023.
The NI increase was reversed from 6 November 2022, and the planned separate levy was cancelled entirely.
A parallel 1.25 percentage point dividend tax increase was also introduced in April 2022 and reversed from April 2023.
Current NI rates for 2026/27 do not include any Health and Social Care Levy element.

Background: The September 2021 Announcement

On 7 September 2021, the UK Government announced a new Health and Social Care Levy to fund additional investment in the NHS and reform of the adult social care system. The plan was to raise approximately £12 billion per year through a 1.25 percentage point increase to National Insurance contributions.^[1]

The announcement was significant because it broke a manifesto commitment not to raise National Insurance. The stated justification was the unprecedented cost pressures on the NHS following the COVID-19 pandemic and the need to address the long-standing funding gap in adult social care.

Implementation: April 2022 NI Increase

From 6 April 2022, National Insurance rates increased by 1.25 percentage points across the board:^[1]

NI Class	Rate Before April 2022	Rate from April 2022	Increase
Class 1 Employee (primary)	12%	13.25%	+1.25%
Class 1 Employer (secondary)	13.8%	15.05%	+1.25%
Class 4 Self-employed (main rate)	9%	10.25%	+1.25%
Class 1 Employee (above UEL)	2%	3.25%	+1.25%
Class 4 Self-employed (above UPL)	2%	3.25%	+1.25%

The increase applied to all workers and employers paying Class 1, Class 1A, Class 1B, and Class 4 NI contributions. It was intended as a temporary mechanism — from April 2023, the NI rates were supposed to return to normal and a separate, visible Health and Social Care Levy of 1.25% would appear on payslips as a distinct deduction.

The Planned Separate Levy

The legislation — the Health and Social Care Levy Act 2021 — set out a two-stage approach:^[1]

Stage 1 (April 2022): Increase NI rates by 1.25 percentage points as a temporary measure
Stage 2 (April 2023): Revert NI rates to normal and introduce a new, separate 1.25% Health and Social Care Levy that would be:

Shown as a separate line on payslips (distinct from NI)
Payable by working adults above State Pension age who are exempt from NI — extending the charge to older workers for the first time
Ring-fenced for health and social care spending

The extension to workers above State Pension age was a notable feature, as these individuals do not normally pay National Insurance. The levy would have been the first UK payroll tax to apply regardless of age.

The Dividend Tax Increase

Alongside the NI increase, dividend tax rates were increased by 1.25 percentage points from April 2022 to ensure that company owners paying themselves through dividends also contributed:^[1]

Tax Band	Rate Before April 2022	Rate from April 2022
Basic rate	7.5%	8.75%
Higher rate	32.5%	33.75%
Additional rate	38.1%	39.35%

Reversal: November 2022

Following a change of Prime Minister in autumn 2022, the new Chancellor announced on 23 September 2022 (in the “mini-budget”) that the 1.25 percentage point NI increase would be reversed and the planned separate Health and Social Care Levy would be cancelled entirely.^[3]

The reversal timeline was:

6 November 2022: NI rates returned to their pre-April 2022 levels (the 1.25% increase was removed mid-year)
April 2023: The planned separate Health and Social Care Levy did not come into effect
6 April 2023: Dividend tax rates reverted to their pre-April 2022 levels

The Health and Social Care Levy Act 2021 was formally repealed by the Health and Social Care Levy (Repeal) Act 2022.

2022/23 payroll complexity: Because the NI increase was reversed partway through the 2022/23 tax year, employers had to operate two different NI rates within a single tax year — the higher rates from 6 April to 5 November 2022, and the original rates from 6 November 2022 onwards. Payroll software was updated to handle this mid-year change.

Current NI Rates Context (2026/27)

The current NI rates for 2026/27 contain no Health and Social Care Levy element. However, NI rates have changed for other reasons:^[2]

Employee Class 1 primary rate: 8% (reduced from 12% in two stages during 2024)
Employer Class 1 secondary rate: 15% (increased from 13.8% from April 2025 to fund public services)
Self-employed Class 4 main rate: 6% (reduced from 9%)

The April 2025 employer NI increase to 15% is unrelated to the cancelled Health and Social Care Levy. It was announced in the October 2024 Autumn Budget as a general revenue-raising measure.

Tip: Although the Health and Social Care Levy no longer exists, the government’s social care reforms (including the care costs cap) are still being implemented, funded through general taxation rather than a dedicated levy. Businesses should stay aware of any future NI rate changes announced in Budgets.

Frequently Asked Questions

What was the Health and Social Care Levy?

It was a 1.25 percentage point increase to National Insurance contributions, announced by the government in September 2021 to raise approximately £12 billion per year for the NHS and social care. It applied to employees, employers, and the self-employed from April 2022. The plan was to separate it into a distinct tax from April 2023, but the entire policy was reversed in November 2022.

Why was the levy cancelled?

The incoming Prime Minister and Chancellor in autumn 2022 reversed the NI increase as part of a package of tax cuts aimed at stimulating economic growth. The Health and Social Care Levy Act 2021 was repealed by the Health and Social Care Levy (Repeal) Act 2022. NI rates returned to their pre-April 2022 levels from 6 November 2022.

Does the Health and Social Care Levy still exist?

No. The levy was fully cancelled and does not apply. NI rates for 2026/27 are set independently of any health and social care levy. The funding for social care reform now comes from general taxation rather than a hypothecated NI surcharge.

What happened to the dividend tax increase?

A parallel 1.25 percentage point increase to dividend tax rates was introduced in April 2022. This was reversed from 6 April 2023, returning the rates to 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate). Those rates then held until 6 April 2026, when the ordinary and upper dividend rates each rose by 2 percentage points, to 10.75% and 35.75% (the additional rate stayed at 39.35%).

Sources

Health and Social Care Levy — GOV.UK
National Insurance rates and thresholds — GOV.UK
Growth Plan 2022 (reversal announcement) — GOV.UK