The National Insurance Contributions (Reduction in Rates) Bill will be debated in the Commons today to implement the largest ever cut to National Insurance from 6 January 2024 – in less than six weeks’ time.
The Bill will be debated throughout the day with Members voting on the Bill this evening. It will then go to the Lords in the middle of December before receiving Royal Assent thereafter.
Reducing Class 1 National Insurance from 12 per cent to 10 per cent will reward work, meaning 27 million employees will effectively pay over 15 per cent less on National Insurance. To the average employee on a salary of £35,400 this will be worth £450 a year, improving living standards and reducing the current combined tax rate of 32% for employees paying the basic rate of tax to 30% - the lowest since the 1980s.
Chancellor of the Exchequer, Jeremy 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.”
These changes will mean that, for those on average salaries, personal taxes would be lower in the UK than every other G7 country, based on the most recent OECD data. Taxes for the self-employed will also be cut and reformed.
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, simplifying the tax system and saving the average self-employed person on £28,200 a year £350 in 2024/25. The changes will see an average full-time nurse on £38,900 receive an annual gain of over £520; an average teacher on £44,300 would receive an additional £630 a year; and a typical self-employed plumber on £34,400 would be £410 better off as a result of these cuts.
