Millions of employees are set to see their national insurance contributions slashed from 6 January 2024, after MPs rushed the a new bill through the House of Commons.
MPs passed The National Insurance Contributions (Reduction in Rates) Bill yesterday (30 November), after chancellor Jeremny Hunt announced in his Autumn Statement that NI contributions would be slashed to 10%.
MPs completed all three Commons readings of the bill on the same day. It will now head to the House of Lords for further scrutiny before it receives Royal Assent and becomes law.
Class 1 national insurance contributions (NICs) will reduce from 12% to 10%, giving the average employee on a salary of £35,400 an extra £450 in their pocket, the Treasury said.
It means that employees paying the basic rate of tax will see their combined taxation reduce from 32% to 30% – the lowest since the 1980s.
Self-employed individuals will see tax reductions 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.
National insurance changes
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.”
The bill received significant support across the Commons, although some MPs suggested that taxes on working people are still too high.
James Murray, Labour’s shadow financial secretary to the Treasury said: “We have long said that we want taxes on working people to come down when they can be cut in an economically and fiscally responsible way.
“The Conservatives should be honest about the inescapable truth facing families across the UK: the tax burden in Britain is still on course to reach its highest level since the second world war… Looking across all taxes, we now know that, by the end of the decade, they will have risen by the equivalent of an astonishing £4,300 for every household in the country.”
Scottish National Party MP Drew Hendry said: “The bill does not go nearly far enough to help people facing a bitter cost of living crisis. We urge the government, after introducing this tiny measure, to go back and consider those people who are suffering from high food costs, seeing their mortgages and rents increase, and – most tellingly, as temperatures plummet – facing a winter with higher energy bills than last year.”
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