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The government has announced it will be scrapping the 1.25% National Insurance hike from 6 November in a bid to “raise living standards for all”.

When revealing the news today chancellor of the exchequer, Kwasi Kwarteng said: “Taxing our way to prosperity has never worked out. 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 increase staff wages, the reversal of the Levy will help them grow, whilst also allowing the British public to keep more of what they earn.”

The rise was initially introduced in April under former chancellor Rishi Sunak 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.

In today’s move, 920,000 businesses will see a cut in NI bills, with 20,000 taken out of paying NI entirely due to the Employment Allowance, which rose in April 2022 from £4,000 to £5,000.

For small businesses, the government predicts the cut will be worth £4,200 on average, with 905,000 micro, small and medium businesses benefitting.

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