Kwasi Kwarteng confirmed on Thursday that the 1.25 percentage point rise in National Insurance that came into force in April will be reversed from November.
Ahead of Friday’s mini-budget, the Chancellor also said the government will cancel the Health and Social Care Levy that was due to be implemented next April.
The move will mean that almost 28m people will keep an extra £330 of their earnings on average next year, while 920,000 businesses will save nearly £10,000 on average. The Health and Social Care Levy had been due to replace this year’s NI rise.
The government will also scrap a planned hike to dividend tax rates.
Kwarteng 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.”
