Millions of people will be £330 better off after a National Insurance hike that came into effect in April is reversed this winter.
Chancellor Kwasi Kwarteng confirmed the increase will be reversed from November 6. Ahead of his mini-budget on Friday, he said: "Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy.
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"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 1.25% increase in national insurance was announced by former chancellor Rishi Sunak to help fund health and social care.
As a result of ditching the levy, the Treasury said almost 28 million people will keep an extra £330 of their money on average next year.
However, Alice Haine, personal finance analyst at investment platform Bestinvest, said a £330 saving "won't stretch far when you realise that only equates to £27.50 a month". She continued: "Yes, every penny counts in this cost-of-living crisis and for some, that £27.50 could be the difference between having dinner every night and sometimes going without.
"For others, however, that amount will barely make a dent in their budgets as they struggle to pay the household bills amid rampant inflation as soaring food, fuel and energy prices become the norm."
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