As had been widely expected, the Chancellor announced further changes to National Insurance contributions (NIC) rates for employees and the self-employed.
There will be a further 2% cut in the main rate of Employee National Insurance from 6 April 2024. This will see Class 1 NICs reduced by 2% from 10% to 8%. This is on top of the earlier reduction, announced as part of the Autumn Statement measures, which reduced Class 1 NICs from 12% to 10% on 6 January 2024. When both of these changes are taken together, the Treasury say this will save the average worker on £35,400 over £900 a year.
The Chancellor also announced that the main rate of self-employed National Insurance, Class 4 NICs, on all earnings between £12,570 and £50,270 will be cut by a further 2%, from 8% to 6% from April 2024.
This is in addition to the previous announcement in the Autumn Statement that the current rate of Class 4 NICs would be reduced from the current 9% to 8% from 6 April 2024. Taken together this means that the main rate of Class 4 NICs for the self-employed will now be reduced from 9% to 6% from next month. Combined with the previously announced abolition of the requirement to pay Class 2 NICs from 6 April 2024, this will save an average self-employed person making profits of £28,000 approximately £650 NIC a year.
Taken together these cuts mean:
- A hard-working family with two earners on the average salary of £35,400 each will be better off by £1,826.
- An average full-time nurse on £38,900 will be better off by £1,053.
- A senior nurse with five years experience on £42,618 will be better off by £1,202.
- The average police officer on £44,300 will be better off by £1,270.
- A cleaner working night shifts on £21,058 will be better off by £340.
- A typical junior doctor on £65,000 will be better off by £1,508.
- A typical self-employed plumber on £34,361 will be better off by £846.
- The typical teacher on £44,300 will be better off by over £1,270.
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