The 1.25 percentage point rise in National Insurance will be reversed from 6 November, the Chancellor Kwasi Kwarteng has announced.
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.
What does the NI reversal mean for you?
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, it claims.
The Health and Social Care Levy (Repeal) Bill, legislating for the tax change, was introduced into the House last Thursday (22 September). As part of the cancellation of the Levy, the Chancellor is set to confirm that the increases to dividend tax rates will be scrapped from April 2023 in his Growth Plan. 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 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.
Previously, the Government decided to raise National Insurance by 1.25 percentage points in April 2022 to fund health and social care. The rate was due to return to 2021-22 levels in April 2023, when a separate new 1.25% Health and Social Care Levy was due to take effect.