The recent 1.25% national insurance rise will be reversed in November and the Health and Social Care Levy will be scrapped, the Treasury has announced.
The Treasury said most employees will receive a cut to their NICs in their November pay, but some are likely to receive it in December or January depending on the complexity of their employer’s payroll software.
The Treasury claimed around 920,000 businesses would benefit from the tax reduction from November, saving them an estimated £10,000 a year that they can invest “as they choose”.
Some 20,000 organisations will be taken out of paying NI entirely due to the employment allowance, which rose in April 2022 from £4,000 to £5,000. The tax cut will save nearly 28 million people an average of £330 per year, the Treasury said.
In April, employers’ and employees’ national insurance contributions (NICs) were increased by 1.25% to help fund the growing health and social care bill.
NICs were set to return to 2021-22 levels in April 2023, when the separate 1.25% Health and Social Care Levy was due to be introduced as a separate line on employees’ payslips.
However, on 22nd September, the government said it would reduce NICs to their previous level and scrap the levy via the Health and Social Care Levy (Repeal) Bill, which has been presented to the House of Commons.
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