Record National Insurance cut arrives in less than six weeks

LONDON, 01 December 2023 /PRNewswire Policy/ --

The National Insurance Contributions (Reduction in Rates) Bill is being debated in the Commons today (November 11).

-27 million employees to receive largest ever cut to National Insurance on 6 January 2024

-Today, the House of Commons will debate the National Insurance Contributions (Reduction in Rates) Bill, with the average employee and self-employed set to get an extra 450 pounds a year and 350 a year

-9 billion pounds a year tax cut means that personal taxes on the average salary are set to be lower in the UK than every other major economy

The National Insurance Contributions (Reduction in Rates) Bill will be debated in the Commons today (November 11) to implement the largest ever cut to National Insurance from 6 January 2024 – less than six weeks’ time from today.

The Bill will be debated throughout the day with Members voting on the Bill this evening. It will then go to the Lords in the middle of December before receiving Royal Assent thereafter.

Reducing Class 1 National Insurance from 12 per cent to 10 per cent will reward work, meaning 27 million employees will effectively pay over 15 per cent less on National Insurance.

To the average employee on a salary of 35,400 pounds this will be worth 450 pounds a year, improving living standards and reducing the current combined tax rate of 32% for employees paying the basic rate of tax to 30% - the lowest since the 1980s.

Chancellor of the Exchequer, Jeremy Hunt, said:

“I’ve been clear from the start that I want to cut taxes. Now, having met our pledge to halve inflation, taxes can be cut in a responsible way that rewards work and helps grow our economy.”

These changes will mean that, for those on average salaries, personal taxes would be lower in the UK than every other G7 country, based on the most recent OECD data.

Taxes for the self-employed will also be cut and reformed. From 6 April 2024, Class 4 NICs for the self-employed will be reduced from 9% to 8% and no self-employed person will have to pay Class 2 NICs, simplifying the tax system and saving the average self-employed person on 28,200 pounds a year 350 pounds in 2024/25.

The changes will see an average full-time nurse on 38,900 pounds receive an annual gain of over 520 pounds; an average teacher on 44,300 pounds would receive an additional 630 pounds a year; and a typical self-employed plumber on 34,400 pounds would be 410 pounds better off as a result of these cuts.

SOURCE UK HM Treasury