On Friday 23rd September Chancellor Kwasi Kwarteng announced his Growth Plan, which will tackle energy costs to help reduce inflation, support businesses and help households. Here are the changes being made;
National Insurance
To help drive investment, growth and productivity within the UK, the government is cancelling the Health and Social Care Levy. To introduce this levy the government introduced a 1.25% increase in National Insurance Contributions, in April 2022
To do this, the government is first reducing National Insurance Contributions, by removing the 1.25% increase for the remaining 2022-23 tax year. The government will also not be enforcing the 1.25% Health and Social Care Levy from 6 April 2023.
This tax cut will help reduce 920,000 businesses' tax liabilities by £9,600 on average in 2023-24. This means 60% of the UK’s businesses with employer NICs liabilities, will benefit from this decision. It also means 28 million people will keep an extra £330 a year.
The government has decided to make this change happen quickly, coming into force on 6 November.
As a result of this tax cut, businesses will have more money to invest in becoming more productive, paying higher wages, creating more jobs and supporting the overall growth of the UK economy.
Approximately 60% (920,000) of businesses with NICs liabilities will see a reduction in their National Insurance bills, with 20,000 of these businesses taken out of paying NICs entirely due to the Employment Allowance. This relief allows eligible businesses to reduce their employer's National Insurance bills yearly.
At Spring Statement, on 23 March 2022, the previous government announced this would be rising by £1,000 from £4,000 to £5,000, which means 40% of businesses with NIC liabilities do not pay NICs.
The average saving for businesses is £9,600 in 2023-24.
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