Update 23/09/22 - In the mini-budget Kwarteng cut the basic rate of tax cut to 19 percent from next April and reversed the NIC rate rise. He also removed the top rate of tax, which was at 45 percent - he then reversed this decision. The calculator below is now updated to reflect these new announcements.
The increase in the rate of National Insurance, which came in April 2022, is to be reversed from November 6th 2022.
Chancellor Kwasi Kwarteng confirmed via his Twitter and via HM Treasury press release that the 1.25 percent hike brought in by predecessor Rishi Sunak is to be repealed.
The 1.25 percent rise in NIC was intended to be temporary as from April 2023 it would return to its regular level but a 1.25 percent health and social care levy would be deducted from wage packets. It has now been confirmed the health and social care levy has also been completely scrapped.
It has also been confirmed the increased NIC thresholds, which came in July 2022 are to remain. This means anyone earning under the personal allowance of £12,570 will continue to have no deductions from the gross income.
Use this calculator to see how the reversal of the 1.25 percent rise and the cut of the basic rate of tax to 19 percent affects your take home pay.
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Though the reversal in NICs comes in from November, the full benefit will be felt from next April where it will be in force for the entire tax year with 28 million people saving up to £330 a year on their deductions.
The saving for the remaining 5 months of the current 2022 tax year equates to around £135 on average.
Dividend bands were also increased by 1.25 percent as dividends are NIC exempt. These bands will also be restored to pre-levy rates - however, this change will be from next year.
We will update our calculators tomorrow as other announcements come out in the mini-Budget and full details are published for all types of income.