HMRC in a spin over National Insurance increase?

HMRC has been criticised for contacting employers to ‘strongly encourage’ them to label the forthcoming National Insurance increase as ‘for the NHS’. This has been labelled as political, in view of the criticism of the looming increase amid concerns over the cost of living crisis.

The statement released by HMRC was evidently intended to help employees to understand the reason for the increase. The statement said: ‘We are therefore requesting that employers include a message for affected employees on all payslips between 6 April 2022 and 5 April 2023, explaining the increased National Insurance contribution. The message should read: 1.25% uplift in NICs funds NHS, health and social care’.

HMRC has also been in contact with payroll software providers to request that they include the message in their software and wider support models. From 2023 the rate for National Insurance will return to the current level and the Social Care Levy will be highlighted on payslips.

The former executive chair Edward Troup of HMRC in 2016-17 also tweeted that ‘it was questionable whether the request to businesses fell within HMRC’s legal powers’ as the department had asked employers ‘to push a political narrative despite it supposedly being politically neutral’.

The increase was announced in September 2021, but since that point there have been increasing calls for it to be delayed or discarded entirely.  These calls have come from a wide range of directions, including  economic groups, business bodies including the Institute of Directors and multi-party parliamentary committees in the House of Commons and the House of Lords.

It remains to be seen whether the Chancellor and Prime Minister bow to this pressure, but both have recently confirmed the intention that it will go ahead. The Spring Statement takes place on the 23rd March, so we’ll let you know then if anything changes!

Please get in touch if you have any questions around this or any other aspects of your affairs.