The government’s reduction in employees’ national insurance contributions took effect from Saturday (6 January 2024), after the chancellor announced a cut by two percentage points, from 12% to 10%, in the Autumn statement.
The Treasury says that around 27 million people will benefit from the tax cut, which sees a £450 saving this year for an average salaried worker on £35,400. An average full-time nurse will save £520, a junior doctor £750 and a teacher £630.
Prime minister Rishi Sunak said: “We have made tough decisions on the economy, supporting people through global shocks such as the pandemic and Putin’s illegal invasion of Ukraine. It is because of the tough decisions this government has taken that today we are able to cut taxes for 27 million people across the UK.
“Today’s tax cuts will directly reward hard-working people, putting £450 back in the pocket of the average worker and helping them make ends meet.”
Chancellor of the Exchequer Jeremy Hunt said: “With inflation halved, we’ve turned a corner and are cutting taxes – starting with today’s record cut to National Insurance worth nearly £1,000 for a household.
“From nurses and brickies, to cleaners and butchers, 27 million hard-working Brits will have a little more cash in their pockets.”
Based on recent data from the Organisation for Economic Co-operation and Development, the government says the cut means that for those on average salaries, personal taxes would be lower in the UK than in every other G7 country.
HMRC has launched an online tool to help people understand how much they will save in national insurance contributions in 2024 following the cut.
Self-employed workers will also see a reduction in tax, with Class 2 national insurance contributions – which are paid at a flat rate of £3.45 a week – abolished altogether from April 2024. Class 4 contributions, which are paid at a rate of 9% on earnings between £12,570 and £50,268, will also be cut to 8%.
Speaking in reaction to the announced cuts in November’s Autumn statement, Ben Harrison, director of the Work Foundation at Lancaster University said workers would welcome the cuts to national insurance, but added that the chancellor was “giving with one hand and taking away with another” by continuing to freeze tax thresholds.
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