Taxpayers will still pay less National Insurance (NI) from November 6 with a 1.25 percentage point cut being kept in place.
Chancellor Jeremy Hunt last week replaced former Chancellor Kwasi Kwarteng, who was sacked after a disastrous Mini-Budget on September 23.
Tax cuts promised in this Mini-Budget rattled markets so badly that the pound fell to record lows, threatened pension funds and led to mortgages beginning to dry up.
Today, Mr Hunt announced he was scrapping almost all of Mr Kwarteng's Mini-Budget proposals.
This included cutting Income Tax to 19p in April - with this measure now being scrapped "indefinitely".
But one thing Mr Hunt is keeping is cuts to National Insurance.
These were originally brought in by former Chancellor Rishi Sunak, Mr Kwarteng's predecessor.
From November 6, NI will be cut from 13.25% to 12%.
What is National Insurance?
NI is a tax on earnings, paid by both employed and self-employed workers.
This cash goes into a pot of money used to fund state benefits.
You pay NI if you’re 16 or over and are either an employee earning above £190 a week, or self-employed and making a profit of £6,725 or more a year.
Once you reach State Pension age, you no longer need to keep paying NI.
How much National Insurance will I pay from November 6?
The below is how much Liz Truss ’s National Insurance cut from 13.25% to 12% will save you from November 6.
It does not include the added impact of the National Insurance threshold rising from £9,880 to £12,570 in July.
- £10,000 salary: No change as you don’t pay National Insurance
- £15,000 salary: £30 a year
- £20,000 salary: £93 a year
- £25,000 salary: £155 a year
- £30,000 salary: £218 a year
- £35,000 salary: £280 a year
- £40,000 salary: £343 a year
- £45,000 salary: £405 a year
- £50,000 salary: £468 a year
On top of this the Government has changied how much you can earn before paying NI.
The idea of the NI cut is to help Brits with the cost of living crisis .
The changes mean some two million low-income workers will pay no NI at all - while millions more will see their tax bill reduced.
The amount you can earn before paying NI rose from £9,880 a year to £12,750 from July 6.
Mr Hunt told the BBC ’s Laura Kuenssberg: “We’re going to have to take some very difficult decisions on spending and on tax.” He said all government departments faced cuts and “some taxes are going to go up” - a reversal of Liz Truss’s pledge.
It is a death knell to so-called 'Trussonomics' of sweeping tax cuts and growth - despite the embattled PM claiming the "mission remains the same" in a surreal nine-minute press conference on Friday.
Labour demanded Liz Truss make a statement to the Commons and warned it will “do everything we can” to force her to appear.
Labour leader Keir Starmer said: “The Prime Minister says she is in charge but the evidence this weekend suggests she is in office but not in power.
“Friday’s press conference completely failed to answer any of the questions the public has. Mortgages are rising and the cost of living crisis is being felt ever more acutely: the Conservative Government is currently the biggest threat to the security and the finances of families across the country.”
