Rise in National Insurance to be scrapped

The rise in National Insurance is set to be reversed in November, following an announcement from the Treasury.

As well as scrapping the 1.25 percentage point rise in National Insurance, Chancellor Kwasi Kwarteng has also unveiled plans to cancel the planned Health and Social Care Levy, a separate tax which was due to come into force in April.

The 1.25 percentage point rise in National Insurance was a temporary measure, which was due to be rolled back and replaced by the planned Health and Social Care Levy.

The levy and increased dividend tax was expected to raise approximately £13bn a year to fund health and social care. However, the government insists funding for health and social care services will be maintained at the same level as if the levy was in place.

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.”

The UK Government says 920,000 businesses will see a cut in National Insurance bills due to the reversal, with 20,000 taken out of paying National Insurance entirely due to the Employment Allowance, which rose in April 2022 from £4,000 to £5,000.