Cut to National Insurance from 6th January 2024
5th January 2024 
Tax 
CHW Accounting
From Saturday 6 January, the average earner will be almost £450 a year better off according to the government.
However, the reality is that due to the freeze on tax thresholds, which is set to stay until 2028, workers are unlikely to feel much benefit as they could have done had the government raised thresholds in line with inflation.
According to the Office for Budget Responsibility (OBR), by the 2028/29 tax year there will be approximately 7.5 million taxpayers paying 40% tax if the brackets remain frozen. This is almost double the number in the 2019/20 tax year when 3.8 million people paid the higher rate!
So, whilst there is not necessarily much to celebrate with the 2p reduction, here is a brief look at what the cut will mean for working people and the Treasury.
2p cut to National Insurance
From Saturday 6 January, a 2p cut to NICs will see the rate for employees cut from 12% to 10%. The average worker earning £34,963 per year will save £447.86 in Class 1 contributions over the year which amounts to £8.61 a week.
It is estimated that the cut will impact 29 million working people and will cost the Treasury approximately £9bn a year.
Impact of NIC cuts at a glance:
| Salary | NIC @ 12% | NIC @ 10% | Saving |
| £30k | £2,091.60 | £1,743.00 | £348.60 |
| £34,963 (average UK salary) | £2,687.16 | £2,239.30 | £447.86 |
| £40k | £3,291.60 | £2,743.00 | £548.60 |
| £50k | £4,491.60 | £3,743.00 | £748.60 |
| £100k | £5,518.60 | £4,764.60 | £754.00 |
What about the self-employed?
For the self-employed, the main rate of Class 4 NICs will reduce from, from 9% to 8%.
Also, from 6 April 2024, there will be no liability to pay the weekly Class 2 flat rate for those with profits above £12,570, while ensuring they will retain access to contributory benefits including the State Pension (as is currently the case).
The government estimates that an average self-employed person on £28,200 will save £350 in the 2024 to 2025 tax year although actual impacts for individual taxpayers will vary according to individual circumstances.
This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.
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