Increase in national insurance schemes will be reversed from 6 November | National insurance

The increase in national insurance contributions introduced by the Boris Johnson government will be reversed from 6 November, Kwasi Kwarteng has announced.

Ahead of his mini-budget on Friday, the chancellor confirmed he was canceling the 1.25 percentage point increase imposed by his predecessor, Rishi Sunak, to pay for social care and clear the NHS backlog.

Kwarteng said he would also scrap the planned health and social care tax, which would come into effect in April to replace the increase in national insurance.

The government on Thursday introduced legislation in the House of Commons to implement the tax changes. Kwarteng said: “It has never worked to tax our path to prosperity. To raise the standard of living for all, we must be unabashed about the growth of our economy.

“Tax cuts are key – and whether businesses reinvest freed up money in new machinery, lower prices on the shop floor or raise wages for staff, rolling back the levy will help them grow, while also giving the British public more of what they earn. ”

The Treasury said most workers would receive a cut in their national insurance premiums directly through their employer’s payroll in their paychecks in November, although some may be delayed until December or January.

The levy is expected to raise around £13bn a year to fund social care and clear the NHS backlog built up as a result of the Covid pandemic.

However, Kwarteng said funding for health and social care services would be kept at the same level as if it were still in effect.

The Chancellor and Liz Truss have argued that the lost revenue will be made up for by higher economic growth fueled by the tax cuts. But as Kwarteng is also preparing to scrap a planned corporate tax hike, some economists have warned about the sharp rise in government bonds.

The Institute of Fiscal Studies said the plan to boost growth was “a gamble at best” and ministers risked putting public finances on an “unsustainable path”.

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