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Jeremy Hunt has slashed National Insurance rates, delivering a tax cut for 27 million workers – but how much will you save?
National Insurance is a tax paid by those under state pension age to fund benefits such as the state pension.
The Chancellor has lowered the 12pc rate that employees pay on earnings between £12,570 and £50,270 down to 10pc.
The reduction, which kicks in from Jan 6, 2024, will shave hundreds of pounds off workers’ tax bills over a full year. The Government estimates that basic rate taxpayers will save £304 on average, while higher rate taxpayers will save £647 and additional rate taxpayers £707.
As well as reducing the rate of Class 1 NICs, paid by employees, the Chancellor has abolished Class 2 NICs paid by self-employed workers.
Currently the self-employed pay a flat fee of £3.45 per week on profits over £12,570. This will be scrapped from April 2024, reducing tax bills for two million workers. The average saving will be £186.
On top of this, Mr Hunt has reduced Class 4 rates that self-employed workers pay on profits between £12,570 and £50,270. This rate will drop from 9pc to 8pc, benefitting 2.1 million self-employed workers. This measure will also apply from April 2024.