This has been announced ahead of Chancellor Kwasi Kwarteng’s fiscal event later today (Friday 23 September), when he is expected to announce the 1.25 percentage point rise to income tax on dividends will be reversed from April 2023.
In April 2022, the Government announced it would be raising national insurance by 1.25 percentage points to fund health and social care.
It was due to return to 2021-22 levels in April 2023, when a separate new 1.25% health and social care levy.
Government estimations
However, the announcement reverses the rise from earlier in the year and cancel’s next year’s introduction of the levy.
The Government estimated this will be worth £4,200 on average for small businesses and £21,700 for medium-sized companies and for employees, it means about 28m people will keep an extra £330 of their money on average next year.
Most employees will receive a cut to their national insurance directly through payrolls in their November pay, however some will receive it in December or January which the Government claimed would be dependent on the complexity of the employer’s payroll software.
UKHospitality chief executive Kate Nicholls said: “Hot on the heels of Government support for businesses facing rising energy costs, cutting national insurance contributions (NICs) is more excellent news for the hospitality sector.”
Financial pressures perfect storm
She added: “[It] will help businesses reduce their costs as they attempt to return to profitability while facing a perfect storm of financial pressures, including the interest rate rise, VAT back to 20% and the frankly unfair business rates regime.
“Cutting employee NICs is a great way to ensure people keep more of their money, primarily so they’re able to pay their bills and then to enjoy affordable luxuries, such as visiting hospitality venues.
“This announcement is particularly welcome as UKH has long campaigned for an employer NICs regime that supports job creation, which this move will certainly help towards.”
General taxation will be used to fund health and social care services to replace the expected revenue from the levy, according to the Government.
