The Bill to reverse April 2022’s rise in National Insurance and cancel the Health and Social Care Levy is expected to pass through the House of Commons on Tuesday afternoon (October 11). This reversal would take effect on Sunday, November 6, and could mean Brits could pocket an average tax cut of £330 a year.
News of the reversal was first confirmed in the government's mini-budget. However, for those earning less than £12,570 a year the reversal will make no difference at all as at this level of earnings no National insurance is payable.
Chancellor of the Exchequer, Kwasi Kwarteng, said: “Reversing the National Insurance rise is a promise delivered. It means an average saving of £330 a year for 28 million workers in the UK, and I’m delighted we will get a step closer to this today as the Bill passes through the Commons."
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He added: “Today marks a crucial moment in our mission to cut tax and boost growth – which will raise the living standards for everyone in the UK.”
A 1.25 percentage point rise in National Insurance and cancellation of next year’s Health and Social Care Levy was announced as part of the Chancellor’s Growth Plan. It claims that by scrapping the rise, tax for 920,000 businesses will be reduced by, on average, nearly £10,000 next year.
Individuals will see the most benefit in their pay packets in 2023-24 with an extra £330 on average, however, this financial year will put around £135 on average back into salaries. The amount saved in National Insurance will increase as earnings do so those will larger salaries will see the biggest benefits.
The previous government decided to raise National Insurance by 1.25 percentage points in April 2022 to fund health and social care. The rate was due to return to 2021-22 levels in April 2023, when a separate new 1.25% Health and Social Care Levy was due to take effect. Tuesday's Bill reverses the rise from earlier this year and cancels next year’s introduction of the Levy.
Following Treasury questions, the Health and Social Care Levy (Repeal) Bill will have its remaining House of Commons stages on Tuesday afternoon. The government says that overall funding for health and social care services will be maintained at the same level as if the Levy were in place, and the government will be doing this without a tax increase. The additional funding used to replace the expected revenue from the Levy will come from general taxation.
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