National insurance hike cancelled by Liz Truss – how much will you save? | Personal Finance | Finance
Liz Truss has announced she will reverse the National Insurance hike imposed by former Chancellor Rishi Sunak to pay for health and social care. It will be a relief to approximately 28 million people who will be £500 better off from next year.
Tim Bennett, Head of Education at Killik & Co, said: “A levy designed to raise an extra 1.25p in every £1 as National Insurance, ostensibly to help fund the NHS and social care, has been scrapped.
“This move will perhaps be the biggest test of the Government’s evident belief in ‘trickle down’ economics as IFS data suggests it will benefit higher earners the most whilst doing little, or nothing, to support lower earners or pensioners.”
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 to 22 levels in April 2023, when a separate new 1.25 percent Health and Social Care Levy was due to take effect.
Today’s legislation reverses the rise from earlier this year and cancels next year’s introduction of the Levy.
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Approximately 920,000 businesses will see a cut in National Insurance bills, with 20,000 taken out of paying National Insurance entirely due to the Employment Allowance, which rose in April 2022 from £4,000 to £5,000.
In particular, many small and medium businesses (SMEs) – who employ over 13 million people in the UK – will see a cut to their National Insurance bills.
Next year this will be worth £4,200 on average for small businesses and £21,700 for medium sized firms who pay National Insurance.
In total 905,000 micro, small and medium businesses will benefit from 2023-24.