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National insurance tax cuts to save workers £330/year from November as Government reverses previous rise – what you need to know

Chancellor Kwasi Kwarteng has announced that the 1.25 percentage point rise in national insurance  contributions (NICs), which took effect earlier this year, will be reversed in November. The change comes ahead of a 'mini-budget' due to take place tomorrow.

In April 2022, certain NIC rates were increased by 1.25 percentage points to help fund health and social care costs – but this will now be reversed. The planned Health and Social Care Levy, which was due to come in next year, will also be scrapped.

The Treasury says the move will help almost 28 million people across the UK "keep more of what they earn" and will be worth £330 on average in 2023-24, with an additional saving of around £135 on average this year.

See our Tax rates 2022/23 guide for a full breakdown of how national insurance works, or use our updated Income tax and NI calculator to see what your new take-home pay will be from November.

Most employees will see the cut reflected in their November 2022 pay

The new rates will take effect on 6 November – and most workers should see the effect in the same month.

However, due to the complexities of some payroll software systems, there will be some people who receive the cut backdated in December 2022 or January 2023.

The table below sets out the gain you can expect to see based on how much you earn.

How much less you'll pay in NICs

Yearly salary Yearly saving
£15,000 £30.38
£20,000 £92.88
£30,000 £217.88
£50,000 £467.88
£75,000 £780.38
£100,000 £1,092.88

The higher threshold for contributions will remain

In July 2022, the threshold from which workers start to pay national insurance rose to £12,570 (from £9,880). As a result, 70% of those who pay NICs started paying less, while 2.2 million people were taken out of paying NICs altogether.

The Government says it will retain thresholds at their current level for the 2023-24 tax year.

Dividend tax rates will also be cut from April 2023

The 1.25 percentage point increase to income tax on dividends, introduced in April 2022, will also be reversed from April 2023. The Treasury says those who pay tax on dividends will save an average of £345 next year.

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