How will the reversal of the national insurance hike affect me?
From Sunday the cancellation of the 1.25 percentage point rise in national insurance has come into effect, meaning many people across the country will now keep more of their pay.
The rise was introduced by Boris Johnson’s government, with Rishi Sunak as chancellor, in April and reversed by former chancellor Kwasi Kwarteng in his infamous mini-budget last month.
Its scrapping is one of few economic policies introduced by Liz Truss and Mr Kwarteng that was not axed by Jeremy Hunt and has stayed in place with Mr Sunak as prime minister.
According to the Treasury, most employees will receive a cut to their national insurance contribution directly via their employer’s payroll in their November pay, although some may be delayed to December or January.
The government said the move to reverse April's National Insurance increase follows the rise in National Insurance thresholds in July, which was said to lift 2.2 million of the poorest people in the UK out of paying the tax.
As a result of both measures, working people will be £500 better off, on average, next year, according to estimates by the government.
The government has estimated how the NI cut will affect different brackets of income-earners. Read more here:
Basic rate taxpayers will on average see a gain of approximately £75 in 2022-23 rising to £175 in 2023-2024.
For higher rate taxpayers, these figures are on average approximately £300 in 2022-23 rising to £700 in 2023-2024.
For additional rate taxpayers, the gain will be on average approximately £1,650 in 2022-23 rising to £3,890 in 2023-2024.
For employees below pension age who earn under £12,570 a year, the national insurance cut will make no difference because they don't pay national insurance.
Above that income level, the amount saved increases as earnings rise.
Most businesses will also see a reduction in their national insurance bills, with each affected company saving an average of £9,600 each in 2023-24, the government has said.
The levy was devised by Mr Sunak when he was chancellor to deal with the NHS backlog and was expected to raise around £13 billion a year to fund social care.
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