First introduced by former Chancellor of the Exchequer Rishi Sunak, the 1.25% rise in National Insurance to fund health and social care will be reversed from November, leaving workers with more disposable income to tackle the harsh economic conditions ahead.
To help ease the pressure on workers during the tough economic conditions facing the UK, new Chancellor Kwasi Kwarteng has announced the 1.25% increase in National Insurance contributions rolled out by the old conservative government will stop from the 6th of November 2022. He said:
“Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy.
Cutting tax is crucial to this – and whether businesses reinvest freed-up cash into new machinery, lower prices on shop floors or increased staff wages, the reversal of the Levy will help them grow, whilst also allowing the British public to keep more of what they earn.”
Most umbrella employees will welcome the announcement because it should help them see an increase in their take-home pay.
What has the government said about the decision to stop the 1.25% rise in National Insurance to help fund health and social care?
The following is a snippet taken from the official government update entitled: National Insurance increase reversed.
“The previous government decided to raise National Insurance by 1.25 percentage points in April 2022 to fund health and social care. The rate was due to return to 2021-22 levels in April 2023, when a separate new 1.25% Health and Social Care Levy was due to take effect. Today’s legislation reverses the rise from earlier this year and cancels next year’s introduction of the Levy.
This is part of the government’s pro-growth agenda, backing business to invest, innovate and create jobs and helping raise living standards for everyone across the UK.
920,000 businesses will see a cut in National Insurance bills, with 20,000 taken out of paying National Insurance entirely due to the Employment Allowance, which rose in April 2022 from £4,000 to £5,000.
In particular, many small and medium businesses (SMEs) – who employ over 13 million people in the UK – will see a cut to their National Insurance bills. Next year this will be worth £4,200 on average for small businesses and £21,700 for medium sized firms who pay National Insurance. In total 905,000 micro, small and medium businesses will benefit from 2023-24.”
The mini-budget is set to be announced on Friday (23rd September)
As soon as we have the information unveiled in the mini-budget, we will share it on our blog. Please pop back tomorrow for the latest developments.
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