Around 27 million people should see a cut to the amount of National Insurance they’re paying as the rate decreases by two percent.
The National Insurance rate is being cut by two percent – from 12 percent to 10 percent. It will save those earning £35,000 over £450 a year.
National Insurance is currently charged at 12 percent on earnings between £12,571 and £50,271 but that will fall to 10 percent from Saturday, January 6.
The cut to National Insurance was a key measure announced by Chancellor Jeremy Hunt at the Autumn Statement
James McCaffrey, spokesperson for TotallyMoney said: “Today, 27 million people should see a cut to the amount of National Insurance they’re paying — reducing the cost by £450 per year for the average worker.
“However, income tax thresholds aren’t rising at the same rate as inflation — and will remain frozen until 2028.
“The result is that those receiving pay rises might find themselves slipping into higher tax thresholds and paying more on their earnings.
“Real household disposable incomes are continuing to slide and while a cut to National Insurance will be of some benefit, it’s unlikely to cover the impact of the soaring cost of living and the freeze to income tax.
“Over the next few years, it’s estimated that nearly 4 million more people will start paying income tax, while 3 million will be subject to higher rates.”
Salary savings to be made:
- £20,000 – £148.60
- £25,000 – £248.60
- £30,000 – £348.60
- £34,963 – £447.86
- £40,000 – £548.60
- £50,000 – £748.60
- £75,000 – £754.00
- £100,000 – £754.00
However, experts point out many people will still pay more despite rate cuts this year.
Sarah Coles, head of personal finance at Hargreaves Lansdown said: “An awful lot of people will still pay more tax in 2024 and beyond due to repeated tax raids, but the National Insurance change is not one to be sniffed at.
“From January 6, Class 1 NI contributions, which are paid on earnings between £12,570 and £50,270, will be cut by two percentage points, from 12 percent to 10 percent.
“That will cut £149 off the tax bill of someone earning £20,000, £349 for someone making £30,000, £549 for someone making £40,000 and £749 for someone making £50,000. Anyone earning over the higher rate tax threshold will save £754.”
For the self-employed it will reduce the main rate of Class 4 National Insurance contributions by 1 percentage point, from nine percent to eight percent, and remove liability to pay the weekly Class 2 flat rate for those with profits above £12,570 from April 6, 2024.
