Approximately 29 million people will benefit from paying a reduced rate of National Insurance from 6th April following announcement of the cut in the Spring Budget.
The main rate of employee National Insurance has dropped to 8% for employees, down from 10% as of January 2024, and 12% this time last year. Over 2 million self-employed people will benefit from the main rate of Class 4 NICs being cut from 9% to 6% alongside the abolition of the requirement to pay Class 2 NICs.
Employer National Insurance Contributions remain unchanged.
Prime Minister Rishi Sunak said:
“Hard work is one of my core values, and the progress we have made on the economy means we can reward work with a tax cut worth £900 for the average earner [based on a £35,400 annual salary].
“This marks the next step in our plan to end the unfairness of double taxation of work by abolishing National Insurance in the long term.”
Chancellor of the Exchequer, Jeremy Hunt, said:
“The record tax cuts taking effect tomorrow show our economic plan is working – because of the progress we’ve made we’re putting hundreds of pounds a year back into the pockets of working people across the country.
“It shows we stand behind those who work hard and fires the starting gun on our long-term ambition to end the unfair double tax on work.“
Alongside the changes to the rate of National Insurance, the income threshold at which the High Income Child Benefit Charge (HICBC) starts has also risen to £60,000. The rate at which the HICBC is charged will also be halved from 1% of the Child Benefit payment for every additional £100 earnt above the threshold, to 1% for every £200, meaning Child Benefit will not be withdrawn in full until individuals earn £80,000 or higher.
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