National Insurance payments will rise in April by 1.25% for employers, employees and the self-employed. It’s a hefty extra cost and so, to help mitigate, employers are reviewing their benefits to ensure they are structured in the most tax-efficient way. More on that in a moment.

The background is that on 7 September last year the government announced the creation of the new Health and Social Care Levy to fund investment in the NHS and social care, a tax of 1.25% . The levy will come into force in the tax year starting in April 2023 but, as a temporary measure, all three rates of NICs will increase by 1.25% from this April – that’s for administrative reasons because the Revenue hasn’t got time to introduce an entirely new tax, with a new tax base, hence these temporary measures.

The increase is a significant one and, to make matters worse, whilst income tax thresholds will rise in April, they will then be frozen for a further four years until April 2026. That means if wages rise more people will find themselves paying a bigger proportion of their income in tax. And then, on top of that, there’s inflation, which is rising fast, meaning the cost of living is getting much more expensive.

So, what can employers do to minimise the impact of all these extra costs? One way is to check your benefits packages are structured in the most tax-efficient way and that is something we are currently helping a number of our clients with. Chris Thomas is a tax lawyer currently advising...