A 1.25% rise in National Insurance introduced in April will be reversed from 6 November, the chancellor has announced.
Before delivering his “mini-budget”, Kwasi Kwarteng claimed the change would save nearly 28 million people an average of £330 per year, noted the BBC.
A press release from the Treasury claimed that “scrapping the rise will reduce tax for 920,000 businesses by nearly £10,000 on average next year as they will no longer pay a higher level of employer National Insurance and can now invest the money as they choose”.
National Insurance (NI) is a tax paid by employees, employers and the self-employed. A rise was introduced in April under former chancellor Rishi Sunak, but new PM Liz Truss pledged to reverse it. Now Kwarteng has acted on that promise.
What it means for you
Currently, employed workers pay 13.25% on earnings between £12,570 and £52,270 and 3.25% on all earnings above this. Employers pay 15.05% on an employee’s earnings.
Self-employed workers pay £3.15 a week, if their profits are above £6,725, and then 10.25% on profits between £11,908 and £50,270 and 3.25% on profits above this.
Kwarteng’s plan means employees will pay 12% and 2% and employers will pay 13.8%. Meanwhile, said The Money Edit, self-employed workers will pay a “blended” rate to reflect the changes over the year when they submit their self-assessment return in January.
The more you earn, the more you will benefit from this change, said the BBC. “For example, somebody earning £20,000 will save about £93 a year, and somebody earning £100,000 will save £1,093, compared to now,” it noted.
Britain’s poorest households will gain just 63p a month from reversing the NI …read more
Source:: The Week – All news