Millions of workers to enjoy national insurance cut

Millions of workers will receive a national insurance cut as the new tax year gets underway, helping to ease some of the strain on household budgets.

The main rate of employee national insurance was cut from 10% to 8% from April 6 – the first day of the 2024-25 tax year.

When combined with a cut previously announced in the autumn statement, this will save the average worker on £35,400 more than £900 a year, the Government has said. About 27 million workers will benefit from the reduction.

And more than two million people will benefit from the main rate of self-employed national insurance being trimmed down.

The main rate of Class 4 NI contributions for the self-employed will be reduced to 6%. When combined with the abolition of the requirement to pay Class 2, this is expected to save a self-employed worker earning £28,000 about £650 a year.

Despite the NI cuts, some other thresholds may act as a “stealth tax” and make people feel worse off just by being left unchanged.

Frozen income tax bands pull people into higher brackets over time as their pay increases. The standard personal allowance is £12,570, which is the amount of income that someone does not have to pay tax on. Prime Minister Rishi Sunak said: “Hard work is one of my core values, and the progress we have made on the economy means we can reward work with a tax cut worth £900 for the average earner. This marks the next step in our plan to end the unfairness of double taxation of work by abolishing national insurance in the long term.”

Chancellor Jeremy Hunt said the cuts show “we stand behind those who work hard and fires the starting gun on our long-term ambition to end the unfair double tax on work”.

Rachel Reeves, Labour’s Shadow Chancellor, said: “Every time Rishi Sunak goes on the television claiming he is cutting taxes, he is insulting the intelligence of hard-working families.”

She accused the Government of “giving with one hand and taking with another”. Labour has launched a poster campaign on what it termed the the “Tory tax double whammy”.

About 170,000 families will also be taken out of paying a tax charge under the Government’s changes. It will increase the threshold at which the high income child benefit charge kicks in, from £50,000 to £60,000.