To alleviate financial strain on households across the UK, the government has initiated a significant reduction in National Insurance (NI), providing relief to approximately 27 million taxpayers. Effective January 6th, 2024, the primary National Insurance rate has been slashed by 2%, decreasing from 12% to 10%. This substantial cut, surpassing 15%, translates to a £450 savings for the average salaried worker earning £35,400, contributing positively to their finances this year.
For households with two average earners, the annual savings could amount to nearly £1,000, presenting a welcome boost to the disposable income of families nationwide. The HMRC has introduced an online tool on the Government's cost of living support website, GOV.UK, to aid individuals in comprehending the implications of the tax cut. Using salary information, this tool generates personalised estimates of potential National Insurance savings for employees.
In addition to this unprecedented tax cut, further measures are scheduled for later in the year, including a National Insurance reduction for 2 million self-employed individuals, set to be implemented on April 6th, 2024. This move, valued at £350 for the average self-employed person earning £28,200, underscores the government's commitment to supporting both businesses and households.
Chancellor Jeremy Hunt expressed, "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."
Read our take on the recently announced Spring 2024 Budget here.
