Reversal of national insurance hike comes into effect
The cancellation of the 1.25 percentage point rise in national insurance has come into effect today.
The rise was introduced by Boris Johnson’s government, with Rishi Sunak as chancellor, in April and reversed by former chancellor Kwasi Kwarteng in his infamous mini-budget last month.
Its scrapping is one of few economic policies introduced by Liz Truss and Mr Kwarteng that was not axed by Jeremy Hunt and has stayed in place with Mr Sunak as Prime Minister.
The levy was devised by Mr Sunak when he was chancellor to pay for social care and deal with the NHS backlog.
Back in January, Mr Johnson and Mr Sunak insisted that it is right to follow through on the “progressive” policy.
Crucial objectives
“We must clear the Covid backlogs, with our plan for health and social care – and now is the time to stick to that plan. We must go ahead with the health and care levy. It is the right plan,” they said.
“It is progressive, in the sense that the burden falls most on those who can most afford it.
“Every single penny of that £39 billion will go on these crucial objectives – including nine million more checks, scans and operations, and 50,000 more nurses, as well as boosting social care.”
When announcing the reversal, the Treasury said most employees will receive a cut to their national insurance contribution directly via their employer’s payroll in their November pay, although some may be delayed to December or January.
The levy was expected to raise around £13 billion a year to fund social care and deal with the NHS backlog which has built up due to the Covid pandemic.
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Ok i’ll take it. It was never going to be used for social care anyway because who said that it would? Exactly. They’re doing this, they’re not doing this. They’re doing that, they’re not doing that. Here’s the football chant at a manager pending the sack. ‘YOU DON’T KNOW WHAT YOU’RE DOING’.
And here’s the Telegraph having a nasty spasm over the possibility, heaven forbid, that the cad Hunt might find another way of cutting back the tax subsidy on pension contributions. Ministers have discussed reducing the rate at which income tax relief is applied to Britain’s 5.5 million higher-rate taxpayers from 40p to a flat rate as low as 20p. Another option being considered is to increase the number of very high earners whose income tax relief is cut even further. The total cost of pension tax relief to the Exchequer is £42.7 billion, of which £22.9 billion is relief on income tax and £19.8 billion is… Read more »