- 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 a
year and £350 a year
- £9 billion 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 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 this will be worth
£450 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, , 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 a year £350 in 2024/25.
The changes will see an average full-time nurse on £38,900
receive an annual gain of over £520; an average teacher on
£44,300 would receive an additional £630 a year; and a typical
self-employed plumber on £34,400 would be £410 better off as a
result of these cuts.
Notes to Editors
- Those self-employed people with profits between £6,725 and
£12,570 will continue to get access to contributory benefits
including the State Pension through a National Insurance credit
without paying NICs, as they do currently.
- Those self-employed individuals with profits under £6,725 and
others who pay Class 2 NICs voluntarily to get access to
contributory benefits including the State Pension, will continue
to be able to do so. The weekly rate they pay will be frozen at
£3.45 for 2024-25, rather than rising by CPI to £3.70.
- Other individuals will continue to be able to pay voluntary
Class 3 NICs to help fill gaps in their National Insurance record
to qualify for the State Pension, exactly as before. The Class 3
rate will also be frozen at £17.45 per week for 2024-25.
- Further information can be found in the National Insurance
Factsheet https://www.gov.uk/government/publications/autumn-statement-2023-national-insurance-factsheet/autumn-statement-2023-national-insurance-factsheet
