From 6 November 2022, the 1.25% rise in National Insurance will be reversed and the planned Levy from April 2023 to fund health and social care will no longer be implemented.
Funding for health and social care services will be protected and will remain at the same level as if the Levy were still 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.
It is anticipated that reversal of the 1.25% rise will save nearly 28 million people an average of £330 a year. Approximately 920,000 firms will save on average £10,000 next year as a result of the change as they will no longer be required to pay a higher level of employer National Insurance.
The majority of employees will receive the tax cut directly via payroll in their November pay, although some will receive it in December or January “depending on the complexity of their employer’s payroll software”, the Treasury said.
The Chancellor is also set to confirm that the increases to dividend tax rates will be scrapped from April 2023. 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.