Exact date 27m workers will get pay boost from Budget National Insurance cut
Millions of workers will take home more of their hard-earned pay after another National Insurance cut was announced by Jeremy Hunt in his Budget today.
National Insurance is a tax on earnings and your contributions help you qualify for certain benefits and the state pension. If you're an employee, you currently pay 10% on earnings between £12,570 and £50,270 in Class 1 National Insurance contributions.
This is being reduced to 8% from this April 6, the Chancellor confirmed today. The latest National Insurance cut will benefit around 27 million workers, with the average person saving £450 a year.
However, this threshold for when you start paying National Insurance remains frozen until April 2028. This means, despite the cut announced today, more people still risk being dragged into paying tax for the first time when they get a pay rise.
Follow our Budget 2024 live blog for the latest updates
Rishi Sunak slammed for 'fly posting' as he leaves poster on historic building
This is the second National Insurance cut confirmed by the Chancellor after he announced a reduction from 12% to the 10% workers pay now in the Autumn Statement last November. National Insurance was reduced to 10% on January 6 this year.
If you are self-employed, you normally pay Class 2 or Class 4 National Insurance contributions, however, Class 2 contributions are being abolished from April this year. This was also announced in the Autumn Statement last year.
In an update today, the Chancellor also confirmed there will be a further cut in Class 4 contributions. Class 4 contributions are currently charged at 9% on profits between £12,570 and £50,270 and this was due to be reduced to 8% from April 2024. This will instead be reduced to 6% from April. You pay 2% on profits over £50,270.
Jeremy Hunt told MPs: “This is the second fiscal event where we have reduced employee and self-employed National Insurance. We have cut it by one third in six months without increasing borrowing and without cutting spending on public services. That means the average earner in the UK now has the lowest effective personal tax rate since 1975 – and one that is lower than in America, France, Germany or any G7 country.”
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “It’s the least surprising announcement in the Budget, and it’s nowhere near as far-reaching as an income tax cut, but the 2p National Insurance cut will make a real difference to how much people have in their pockets.
“The more you earn, the more you save, so someone on a salary of £30,000 will save £349 a year, someone making £40,000 saves £549, someone on £50,000 saves £749, and anyone making over the higher rate tax threshold saves £754. These kinds of figures are not to be sniffed at, particularly for anyone being squeezed by higher mortgage payments or facing the multitude of price rises coming in Awful April.
“Unfortunately, there’s no relief for those past state pension age – who don’t pay National Insurance - or those earning income from investments.“
Read more similar news:
Comments:
comments powered by Disqus
