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Spring Budget 2024 – NIC changes

7 March 2024

As had been widely expected, the Chancellor announced further changes to National Insurance contributions (NIC) rates for employees and the self-employed.

As had been widely expected, the Chancellor announced further changes to National Insurance contributions (NIC) rates for employees and the self-employed.

Employee National Insurance Reductions

On 6 April 2024, the government will cut the main rate of Employee National Insurance by an additional 2%. Consequently, reducing Class 1 NICs from 10% to 8%. As part of the Autumn Statement measures, the government previously announced a reduction, lowering Class 1 NICs from 12% to 10% on 6 January 2024. The Treasury asserts that these combined changes will save the average worker earning £35,400 over £900 per year.

Additionally, the Chancellor will implement a 2% reduction in the main rate of self-employed National Insurance, Class 4 NICs, for all earnings between £12,570 and £50,270. This reduction will lower the rate from 8% to 6%, starting in April 2024.

In addition to the earlier announcement in the Autumn Statement, where it was stated that the current rate of Class 4 NICs would decrease from 9% to 8% starting 6 April 2024, the main rate of Class 4 NICs for self-employed individuals will now see a reduction from 9% to 6% next month. When combined with the previously announced elimination of the obligation to pay Class 2 NICs from 6 April 2024, this change is expected to result in an annual savings of approximately £650 in NICs for an average self-employed person with profits of £28,000.

Spring Budget Impact on Individuals’ Incomes

Taken together these cuts mean:

  • A hard-working family with two earners on the average salary of £35,400 each will be better off by £1,826.
  • An average full-time nurse on £38,900 will be better off by £1,053.
  • A senior nurse with five years experience on £42,618 will be better off by £1,202.
  • The average police officer on £44,300 will be better off by £1,270.
  • A cleaner working night shifts on £21,058 will be better off by £340.
  • A typical junior doctor on £65,000 will be better off by £1,508.
  • A typical self-employed plumber on £34,361 will be better off by £846.
  • The typical teacher on £44,300 will be better off by over £1,270.

To find out more information about the Spring Budget, read our article, here.

Source: HM Treasury Wed, 06 Mar 2024 00:00:00 +0100

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