Self Employed NIC Rates and the Health and Social Care Levy

Published / Last Updated on 10/02/2022

We explained in video 1 that a new Health and Social Care levy starts on 6 April 2022 with a 1.25% increase to self employed National Insurance Contributions (NIC) but from April 2023, National Insurance will return to its current rates.  Instead, the extra 1.25% will be collected as a new Health and Social Care Levy.  This levy, unlike National Insurance, will also be paid by state pensioners who are still working.

For the self employed, there are two standard NIC rates:  Class 2 and Class 4.  Class 2 is a flat weekly rate for all self-employed and ensures self employed get their state pension credit for the year.  Class 4 contributions are a % of NIC based upon profit levels.

Class 2 NIC does have the 1.25% levy but Class 4 NIC does have the 1.25% levy added to the 2021/22 % rate for 2022/23 but will revert back to 2021/22 rates in 2023/24 when a separate Health and Social Care levy (tax) comes into force.

In 2023/24 the new levy (tax) will still only be applied based upon Class 4 profit bands but it also means that Self Employed pensioners still working and making profits will also be caught by the new Health and Social Care levy.

Self-employed Class 2 contribution rates and thresholds:

 

Tax year 2021 to 2022

Tax year 2022 to 2023

Small Profits Threshold (SPT)

£6,515 pa

£6,725 pa

Class 2 contribution rates (not affected by levy increase)

 

Tax year 2021 to 2022

Tax year 2022 to 2023

 

£ per week

£ per week

Annual profits (£ a year) below Small Profits Threshold (SPT) – below £6,725 in 2022/23

£3.05 (voluntary)

£3.15 (voluntary)

Annual profits (£ a year) above Small Profits Threshold (SPT) – above £6,725 in 2022/23

£3.05

£3.15

Special Class 2 rate for share fishermen

£3.70

£3.80

Special Class 2 rate for volunteer development workers

£6.00

£6.15

 Self-employed Class 4 contribution rates and thresholds (£ per year)

 

Tax year 2021 to 2022

Tax year 2022 to 2023

Lower Profits Limit (LPL)

£9,568

£9,880

Upper Profits Limit (UPL)

£50,270

£50,270

 Class 4 contribution rates - increased by 1.25% to pay levy

 

Tax year 2021 to 2022

Tax year 2022 to 2023

Annual profits band

NIC rate (per cent)

NIC rate (per cent)

Below Lower Profits Limit (LPL) – % NIC on profits below £9,880 in 2022/23

0%

0%

Lower Profits Limit (LPL) to Upper Profits Limit (UPL) – % NIC on profits between £9,880 and £50,270 in 2022/23

9%

10.25%

Above Upper Profits Limit (UPL) – % NIC on profits above £50,270 in 2022/23

2%

3.25%

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