The 1.25 percentage point rise in National Insurance will be reversed from 6 November, the Chancellor Kwasi Kwarteng has announced.
From April 2023, this was due to be paid through a new ‘Health and Social Care Levy’ at a rate of 1.25 per cent. Ms Truss has now scrapped this plan in favour of economic policy that lowers taxes to grow the economy.
For employees under pension age who earn less than £12,570 a year, the move will make no difference – because they don’t pay NI.
Above that income level, the amount saved increases as earnings do.
So higher earners stand to benefit more than people on lower incomes – although higher earners will still contribute more tax overall.
Since 6 April, workers and employers have been paying an extra 1.25p in the pound. The increase was part of the government’s plan to fund the NHS and social care.
It took the rate of NI to 13.25%. That meant the government went back on its 2019 election manifesto promise not to raise the tax.
The NI increase was due to be replaced by a new Health and Social Care Levy – at a rate of 1.25% – in April 2023.
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
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