In September 2021, the government announced it will raise the rates of dividend tax and some National Insurance contributions (NICs) by 1.25%, although NIC rates are set to be lowered again in April 2023. The change will be legislated for in the Finance Bill 2022.
Changes to NIC rates will apply to the self-employed (Class 4) and employees and employers (Class 1), as well as those above the current state pension age of 66-years-old. Existing NICs reliefs will continue to apply to, for example, employers employing apprentices aged 25 or below and the employment allowance.
However, increasing tax rates will result in higher costs being faced by employers and the self-employed.
