National Insurance Growth Reversed – GOV.UK and other news

Published by
Peter Kavinsky
  • April increase in National Insurance to be waived from November – fulfilling key PM promise to cut tax burden and spur economic growth

  • The Health and Social Assistance Tax will be abolished with a bill introduced today – the chancellor confirmed that funding for health and social services will be protected and remain at the same level as if the levy were in place.

  • Nearly 28 million people will save an average of £330 more of their money next year, while 920,000 businesses will save an average of almost £10,000 next year thanks to the change.

Fulfilling the prime minister’s promise to cut taxes to boost growth, removing the hike would cut taxes for 920,000 businesses by an average of almost £10,000 next year as they no longer pay higher levels of employers’ national insurance and can now invest the money. how they choose.

The government will also eliminate the planned Health and Social Assistance Tax, a separate tax that went into effect in April 2023 instead of raising National Insurance this year. This will help nearly 28 million people across the UK save more than what they earn, by an average of £330 in 2023-24, with an additional savings of around £135 this year.

Today, a bill was introduced in the House of Representatives to repeal the Health and Social Security tax, providing for a change in the tax. As part of the abolition of the levy, the Chancellor must also confirm that the increase in tax rates on dividends will be waived from April 2023 in his Growth Plan Tomorrow. An increased tax on dividends was introduced in April 2022 to ensure that those who receive income from dividends contribute the same amount towards health and welfare funding.

Levy was expected to raise around £13bn a year to fund health and welfare. The Chancellor confirmed today that funding for health and welfare services will be maintained at the same level as if there was a levy to protect the NHS through the winter and ensure long-term investment in social care.

Chancellor of the Exchequer Kwasi Kwarteng said:

Taxing our path to prosperity has never worked. To improve the standard of living for all, we must be uncompromising in our economic growth.

Tax cuts are critical to this – and whether businesses reinvest their freed-up cash in new equipment, cut factory prices or raise wages for staff, removing the tax will help them grow and also allow British society to keep more of what they earn.

The previous government decided to raise national insurance by 1.25 percentage points in April 2022 to fund health and welfare. The rate was due to return to 2021-2022 levels in April 2023, when a separate new 1.25% health and social assistance tax was due to come into effect. Today’s legislation removes the raise from the beginning of this year and removes the Levy’s introduction next year.

It is part of the Government’s Growth Programme, which helps businesses invest, innovate and create jobs, and help improve the standard of living for all people in the UK.

920,000 businesses will see a reduction in National Insurance bills, with 20,000 businesses being completely excluded from paying National Insurance due to unemployment benefits that rose from £4,000 to £5,000 in April 2022.

In particular, many small and medium-sized enterprises (SMEs), which employ more than 13 million people in the UK, will see their National Insurance accounts cut. Next year it will cost an average of £4,200 for small businesses and £21,700 for medium-sized firms that pay National Insurance. A total of 905,000 micro, small and medium enterprises will benefit from 2023-24.

National insurance thresholds were raised in July 2022 to exempt the 2.2 million poorest people in the UK from paying tax. The Chancellor has committed to maintaining these thresholds to support families. Combined, the higher thresholds and Levy’s cancellation mean nearly 30m people will receive an average of more than £500 in 2023-24.

Since the prime minister has pledged to take immediate action to maximize monetary benefits for people and businesses this year, the government is implementing the changes as soon as possible. Most employees will receive their National Insurance cut directly through payroll in their November paycheck, and some will receive it in December or January, depending on the sophistication of their employer’s payroll software.

In addition, the chancellor is expected to announce tomorrow at his financial event that the 1.25 percentage point increase in income tax on dividends, announced with the levy and introduced in April 2022, will be eliminated from April 2023. Dividend payers save an average of £345 next year. The repeal of the ‘dividend tax’ increase signals renewed support for entrepreneurs and investors as part of the government’s efforts to boost the economy and improve the living standards of families across the UK.

General funding for health and social services will be maintained at the same level as if there were a levy, and the government will do so without raising taxes. The additional funding used to replace expected collection revenues will come from general taxation. The chancellor intends to reduce the debt-to-GDP ratio over the medium term and accelerate growth, which will help fund public services sustainably.

Further information

  • Read the legislation
  • The Employment Benefit is a benefit that allows eligible businesses to reduce their employers’ National Insurance Contribution (NIC) bills each year. In the Spring Statement of 23 March 2022, the previous chancellor announced that this amount would rise by £1,000 from £4,000 to £5,000.

  • While in all circumstances people should contact their employer for reimbursement in the first place, there may be circumstances in which individuals may need to contact HMRC for reimbursement. For example, if their employer no longer trades, or if a person has changed jobs and his previous employer has confirmed that he cannot return the money retroactively on his own.

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