Health and Social Care Levy to be reversed
The Chancellor has announced, ahead of today’s fiscal event (23 September), that the Health and Social Care Levy will be cancelled. This was initially introduced via a 1.25 percentage point rise in National Insurance contributions (NICs), which took effect in April 2022. The Levy operates UK-wide and there is a legal requirement to allocate Levy revenues for spending on health and social care.
The reversal will be delivered in two parts:
- The government will reduce National Insurance rates from 6 November 2022, in effect removing the temporary 1.25 percentage point increase for the remainder of the 2022-23 tax year;
- The 1.25% Health and Social Care Levy will not come into force as a separate tax from 6 April 2023 as previously planned.
The Chancellor is expected to say that overall funding for health and social care services will be maintained at the same level, as if the levy was in place, and the Government will be doing this without a tax increase. The additional funding used to replace the expected revenue from the Levy will come from general taxation.
The Health and Social Care Levy (Repeal) Bill, effecting the reversal, has been introduced in the House of Commons. The Chancellor is due to confirm that corresponding increases to dividend tax rates will be scrapped from April 2023 in his Growth Plan.
The Government says approximately 60% (920,000) of businesses with NICs liabilities will see a reduction their National Insurance bills, with 28 million people in the UK keeping an extra £330 a year, on average, in 2023-24.
Factsheet on reversal of health and social care levy
National Insurance increase reversed
Stop Press: Mini-Budget/fiscal event documents issued on 23 September, following the Chancellor's speech:
Chancellor announces new Growth Plan with biggest package of tax cuts in generations
Commentary by Homecare Association affiliate members, Hazlewoods.
