National Insurance contributions rose by 1.25% in July for employees and employers under the new health and social care levy designed to raise up to £14bn to fund social care and deal with the NHS backlog following the Covid pandemic.
Following this, since the start of July, workers and employers have been paying an extra 1.25p in the pound.
However, the measure, which was introduced by Boris Johnson's government, was reversed by former chancellor Kwasi Kwarteng in his mini Budget in September.
It is one of the few economic policies planned by Liz Truss and Kwarteng that has not been scrapped by new chancellor Jeremy Hunt.
The NI cut will be worth an extra £330 on average in 2023-24 affecting almost 28 million people across the UK, while 920,000 businesses will save an average of £10,000.
Working people across the UK will begin receiving the tax cut in their payslips this month via their employer’s payroll, though for some it could be December or January.
The reverse follows the rise in National Insurance thresholds in July, which aimed to lift 2.2 million of the poorest people in the UK out of paying the tax.
All workers earning over the annual national insurance threshold of £12,570 will see a fall in their national insurance bill in November compared to July. Above that level, the rate has gone back down from 3.25% to 2%.
Taken together, the higher thresholds and the Levy reversal means that almost 30 million people will be better off by an average of £500 in 2023-24.
Funding for health and social care services will be maintained at the same level as if the levy were in place.
Source: extracts from various sources including HMRC and other professional accountancy journals