NI hike WILL be spiked on November 6
THE national insurance hike will be reversed from November 6, the Chancellor announced yesterday.
In a victory for the Daily Mail’s Spike the Hike campaign, Kwasi Kwarteng said the 1.25 percentage point rise for workers and businesses would be axed.
Since April, workers and employers have been paying an extra 1.25p in the pound to hep fund the NHS and social care.
In July then-chancellor Rishi Sunak raised the threshold at which NI is paid to offset the increase for many workers. But the Mail led calls for the Government to spike the hike altogether amid the cost of living crisis.
Yesterday Mr Kwarteng confirmed that the rise would be reversed in November. He said the Government would also cancel the health and social care levy, which was due to come into force in April 2023 to replace the national insurance rise.
Reversing the hike will help nearly 28million workers keep more of what they earn. The move will be worth an extra £330 on average in 2023-24.
It will also reduce tax for 920,000 businesses by nearly £10,000 on average next year, according to the Treasury.
MPs are expected to vote on repealing the levy when they return from party conferences.
The tax was expected to raise around £13billion a year to fund health and social care – but the Chancellor has confirmed that the funding will be maintained at the same level as if the levy was in place. Mr Kwarteng said: ‘Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy.’
He added: ‘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, while also allowing the British public to keep more of what they earn.
‘A tax cut for workers. More cash for businesses to invest, employ and grow.’ The reversal was welcomed last night by business leaders, who said it would help support livelihoods and jobs.
Kitty Ussher, chief economist at the Institute of Directors, said: ‘At a time when business is already facing unprecedented energy and other supply-side costs, this is a hugely important change that can improve the situation for SMEs trying to grow in very difficult circumstances.’
Liz Cameron, chief executive of the Scottish Chambers of Commerce (SCC), welcomed the move, saying: ‘This has been long-awaited and will help firms struggling to recruit.’
Sean Cockburn, chairman of the Chartered Institute of Taxation’s Scottish technical committee, said: ‘Employees will pay around £30 per month less than before the increase took effect in April because the threshold for paying the levy was increased in July1.
‘Scots with income between the Scottish and UK higher rate income tax thresholds will continue to pay a higher marginal rate of tax (53 per cent) on that part of their income compared with someone elsewhere in the country (32 per cent).’