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New Chancellor scraps NHS levy and NI hike

New Chancellor scraps NHS levy and NI hike

The Health and Social Care Levy which was due to come into force in April 2023 has been scrapped, as the Government reversed plans to raise NHS money via tax.

Ahead of tomorrow’s mini budget, chancellor Kwasi Kwarteng also said this year’s 1.25% rise in National Insurance (NI) will be reversed on 6 November.

And the levy which was due to be come in from the start of the next financial year to replace the NI rise will be cancelled, he confirmed.

It is a tax cut for workers which will mean ‘more cash for businesses to invest, employ and grow’, he announced.

The Health and Social Care Levy first came into force in April as a 1.25 percentage point rise to NI to help fund the NHS, health and social care. NI was set to return to 2021/22 levels after a year to be replaced by the levy as a separate tax.

It was announced by then Prime Minister Boris Johnson in 2021 to help frontline services.

The majority from the tax increases in the first three years was earmarked for improving the NHS waiting list while a growing proportion will go to social care.

It meant that working pensioners – estimated at around 1.2m people – would also be asked to pay NI contributions for the first time. 

Health services in Scotland, Wales and Northern Ireland would receive an extra £2.2bn a year, the Government said at the time. 

And it was also stated that as part of the social care plan, it would mean no one in England would have to pay more than £86,000 for care over their lifetime. 

The Chancellor said said he intends to protect health and social care funding at the same levels as if the levy remained in place.