The increase in National Insurance has changed

  • April’s National Insurance increase is set to be reversed from November – delivering on the PM’s big promise to cut taxes and boost economic growth.

  • The Health and Social Care Levy will be abolished through a Bill introduced today – the Chancellor has confirmed that funding for health and social care will be protected and will remain at the same level as if the Levy was in place.

  • About 28 million people will save about $330 next year, while 920,000 businesses are expected to save about $10,000 next year as a result of the change.

Delivering on the Prime Minister’s promise to cut taxes to support growth, leaving the increase will reduce the tax rate of 920,000 businesses by about $ 10,000 next year because they will no longer pay the amount of employers’ National Insurance and now they can invest the money. as they choose.

The Government will also cancel the revised Health and Social Care Levy – another levy which came into force in April 2023 to offset the rise in National Insurance this year. This will help around 28 million people in the UK save more of their income, which will cost them an average of £330 in 2023-24, and save around £135 this year.

The Health and Social Care Levy (Repeal) Bill, which introduces tax reform legislation, was introduced into the House today. As part of the abolition of the Levy, the Chancellor is also expected to confirm that the increase in dividend tax will be phased out from April 2023 in his Growth Plan tomorrow. The increase in dividend tax was introduced in April 2022 to ensure that those who earn income from dividends contribute the same amount to support the costs of health and social services.

The levy is expected to raise about $13 billion a year to support health and social care. The Chancellor confirmed today that spending on health and social care will be kept at the same level as if the Levy was in place, protecting the NHS over the winter and ensuring long-term funding is maintained.

Chancellor of the Exchequer Kwasi Kwarteng said:

Taxing our way to prosperity has not worked. To raise living standards for all, we need to be unapologetic about expanding our wealth.

Tax cuts are key to this – and if businesses recoup the money raised in new machinery, lower prices in shops or increased wages for workers, the return of the Levy will help them grow, and allow Britons to save more. they earn money.

The previous government decided to raise National Insurance by 1.25 percent in April 2022 to fund health and social services. The rate was due to return to 2021-22 levels in April 2023, when the 1.25% Health and Social Care Levy was due to come into effect. Today’s legislation reverses the increase earlier this year and prevents implementation of the Levy for next year.

It is part of the public sector, helping businesses to invest, innovate and create jobs and helping to improve the quality of life for everyone in the UK.

920,000 businesses will see a cut in their National Insurance credits, while 20,000 will be exempt from paying National Insurance due to the Employment Allowance, which will rise in April 2022 from $4,000 to $5,000.

In particular, small and medium-sized enterprises (SMEs) – which employ more than 13 million people in the UK – will see their National Insurance claims cut. Next year this will be £4,200 on average for small businesses and £21,700 for medium-sized companies paying National Insurance. A total of 905,000 micro, small and medium enterprises will benefit from 2023-24.

National Insurance rises in July 2022 to exempt 2.2 million of the UK’s poorest people from paying tax. The Chancellor is committed to maintaining the level of these limits in order to support families. Taken together, the higher thresholds and changes to the Levy mean that around 30 million people will be better off by around $500 in 2023-24.

With the Prime Minister’s promise to increase the income of the people and businesses this year, the government is implementing these changes soon. Most workers will receive their National Insurance payment directly through their November salary, and some will receive it in December or January, depending on the complexity of their employer’s payment program.

In addition, the Chancellor is expected to announce in his financial statements tomorrow that the 1.25 per cent increase in payroll tax announced alongside the Levy, to be announced in April 2022, will be reversed from April 2023. save around £345 next year. The change in dividend tax rate reflects new support for businesses and investors as part of the government’s efforts to grow the economy and improve the quality of life for families in the UK.

All health and social care costs will be kept at the same level as if the Levy existed, and the government will do this without any increase in taxes. The additional funds that will be used in lieu of the expected income from the Levy will come from general taxation. The Chancellor is committed to reducing the debt-to-GDP ratio over the medium term and boosting growth, which will help support public spending.

More information

  • Read the book laws
  • Employment Allowance is a relief that allows eligible businesses to reduce their National Insurance contributions (NICs) bills each year. At the Spring Statement on 23 March 2022 the previous Chancellor announced that this would increase by £1,000 from £4,000 to £5,000.

  • While people should always contact their employer for a refund as their first port of call, there may be circumstances where people may need to apply to HMRC for a refund. For example, if their employer is no longer in business, or if a person has moved positions and their previous employer has confirmed that they cannot repay their money.