Almost 30 million employees are to receive the largest-ever cut to National Insurance payments in the new year with a reduction from 12 percent to 10 percent.
The House of Commons has debated the National Insurance Contributions (Reduction in Rates) Bill, with the average employee and self-employed set to get an extra £450 a year and £350 a year, and allows the Government to say the £9 billion a year tax cut means that personal taxes on average salaries will be lower in the UK than every other major economy.
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.
