As was widely expected to be announced in the mini-Budget tomorrow, the Treasury has announced this afternoon that the National Insurance increase introduced earlier this year will be reversed from 6 November for both employees and employers, alongside the introduction of the health and social care levy (repeal) bill.
It said:
“The 1.25 percentage point rise in national insurance will be reversed from 6 November, the chancellor, Kwasi Kwarteng, has announced today.
Delivering on the prime minister’s pledge to slash taxes to help drive growth, scrapping the rise will reduce tax for 920,000 businesses by nearly £10,000 on average next year as they will no longer pay a higher level of employer national insurance and can now invest the money as they choose.
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. 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.
The health and social care levy (repeal) bill, legislating for the tax change, has been introduced into the House today. As part of the cancellation of the levy, the chancellor is also set to confirm that the increases to dividend tax rates will be scrapped from April 2023 in his growth plan tomorrow. 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 today 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.”
For those in control of when they can receive their income, it may be worth delaying any bonuses until after 6 November and dividends until after April 2023.
We are also expecting that the Chancellor will announce a reversal of the planned Corporation Tax increase rate tomorrow in his mini-Budget, and today’s early announcement may mean that the new Chancellor has left room for more surprises to be announced. Keep tuned to BHP Insights for more updates!
