National Insurance increase reversed, but will you be saving money and how much?

It was recently announced by the treasury that the 1.25% NI increase introduced in April will be reversed from 6 November which it says will save almost 28 million workers an average of £330 per year.

Tim Clark, partner in the law firm Blandy & Blandy’s who works within their Employment Law team has explained the announced reversal of the National Insurance rise, introduced earlier this year.

The majority of employees should receive the NI cut directly via their November payroll, but some may not do so until December or January, depending on their employer’s payroll software and processes.

Analysis indicates that employees will make the following savings:

• Salary £20,000 = £93 Annual saving
• Salary £30,000 = £218 Annual saving
• Salary £50 000 = £468 Annual saving
• Salary £80,000 = £843 Annual saving
• Salary £100,000 = £1,093 Annual saving

It said, “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.”

“In addition, the Government will cancel the planned Health and Social Care Levy, a separate tax that was set to come into force in April 2023 to replace this year’s National Insurance rise.”