As the Government is committed to a low-tax, high growth economy to ensure people retain more of the money they earn and for businesses to be able to invest, grow and be productive an announcement was made, that the National Insurance Contributions increase will be reversed along with the provisionally planned Health and Social Care Levy.
- National Insurance rates from 6th November 2022 will be reduced, removing the 1.25% increase for the remainder of the tax year.
- The Health and Social Care Levy will not come into force as a separate tax from April 2023.
The National Insurance increase was introduced back in April 2022 to help fund health and social care services and to help the NHS recover after the pandemic along with providing ongoing support. The Levy was proposed to raise around £13bn a year to fund social care and to help deal with a backlog in healthcare services during the course of the pandemic. The removal of the increase means that the funding for these services will be maintained at the same level as if they Levy was in place.
Due to the ongoing cost of living crisis and the Government being put under increasing pressure to provide support to households, this change has been motivated to happen and increase signals of priorities shifting. With the Health and Social Care Levy being axed, this reduces 60% of the UK’s businesses employer NICs liabilities and means 28 million people on average across the UK will save an extra £330 per year.