The 1.25 percentage point rise in National Insurance will be reversed from 6 November, the Chancellor Kwasi Kwarteng has announced today (22 September).
April's National Insurance increase is to be reversed from November - delivering on key PM pledge to cut tax burden and promote economic growth.
Almost 28 million people will keep an extra £330 of their money on average next year, whilst 920,000 businesses are set to save almost £10,000 on average next year thanks to the change.
The government will also cancel the planned Health and Social Care Levy ' a separate tax which was coming into force in April 2023 to replace this year's National Insurance rise. This will help almost 28 million people across the UK keep more of what they earn, worth an extra £330 on average in 2023-24, with an additional saving of around £135 on average this year.
The Health and Social Care Levy (Repeal) Bill, legislating for the tax change, has been introduced into the House today. As part of the cancellation of the Levy, The Chancellor is also set to confirm that the increases to dividend tax rates will be scrapped from April 2023 in his Growth Plan tomorrow. The increased dividend tax was introduced in April 2022 to ensure those who gained income from dividends contributed the same amount to help fund health and social care.
The Levy was expected to raise around £13 billion a year to fund health and social care. The Chancellor confirmed today that the funding for health and social care services will be maintained at the same level as if the Levy was in place, protecting the NHS through the winter and ensuring long-term investment in social care.
Chancellor of the Exchequer Kwasi Kwarteng said:
"Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy.
Cutting tax is crucial to this ' and whether businesses reinvest freed-up cash into new machinery, lower prices on shop floors or increased staff wages, the reversal of the Levy will help them grow, whilst also allowing the British public to keep more of what they earn."
About the Author: Kerrie Given
