The 1.25% rise in National Insurance contributions expected to come this November has been scrapped.

Ahead of his mini-budget on Friday, chancellor Kwasi Kwarteng announced the policy change, rolling back the plan ex-Chancellor Rishi Sunak announced in April.

“Taxing our way to prosperity has never worked,” Mr Kwarteng said. 

“To raise living standards for all, we need to be unapologetic about growing our economy.”

“Cutting tax is crucial to this – and whether businesses reinvest freed-up cash into new machinery, lower prices on shop floors or increased staff wages, the reversal of the levy will help them grow, whilst also allowing the British public to keep more of what they earn.”

The Treasury said most employees will receive a cut to their National Insurance contribution directly via their employer’s payroll in their November pay, although some may be delayed to December or January.

Nearly 28 million people are set to save an average of £330, whilst 920,000 businesses are set to save almost £10,000 on average next year.

Kwarteng said he would also be scrapping the planned health and social care levy, which was due to come into effect next April to replace the national insurance rise.

The levy was expected to raise around £13bn a year to fund social care and deal with the NHS backlog which has built up due to the COVID pandemic.

Despite no levy funding for health and social care services will be maintained at the same level as if the tax was in place.