The rise in nationwide insurance coverage will probably be reversed from November 6, Chancellor Kwasi Kwarteng has confirmed forward of Friday's mini finances.
A 1.25 per cent improve in nationwide insurance coverage was introduced by former Chancellor Rishi Sunak to assist fund well being and social care throughout the nation.
Forward of his mini finances on Friday, Kwarteng mentioned: "Taxing our solution to prosperity has by no means labored. To boost dwelling requirements for all, we have to be unapologetic about rising our financial system.
"Slicing tax is essential to this - and whether or not companies reinvest freed-up money into new equipment, decrease costs on store flooring or elevated workers wages, the reversal of the levy will assist them develop, while additionally permitting the British public to maintain extra of what they earn."
Kwarteng known as the plan to reverse the rise in nationwide insurance coverage contributions a "tax minimize for staff".
In a tweet that seems to pre-empt Friday's mini-budget, he mentioned: "I can verify that this 12 months's 1.25% level rise in Nationwide Insurance coverage will probably be reversed on sixth November.
"Its substitute - the Well being and Social Care Levy deliberate for April 23 - will probably be cancelled. A tax minimize for staff. More money for companies to take a position, make use of and develop," he mentioned.
The Treasury mentioned most workers will obtain a minimize to their nationwide insurance coverage contribution immediately through their employer's payroll of their November pay, though some could also be delayed to December or January.
The levy was anticipated to lift round £13 billion a 12 months to fund social care and take care of the NHS backlog which has constructed up because of the Covid pandemic.
Nevertheless Kwarteng mentioned funding for well being and social care providers will probably be maintained on the similar degree as if it was nonetheless in place.
The Chancellor and Prime Minister Liz Truss have argued that the misplaced revenues will probably be recovered by increased financial development stimulated by the cuts in taxation.
However with Kwarteng additionally making ready to scrap a deliberate rise in company tax, some economists have warned concerning the sharp rise in Authorities borrowing.
The Institute for Fiscal Research mentioned the plan to drive development was "a raffle at finest" and that ministers risked placing the general public funds on an "unsustainable path".
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