Starting today, Saturday 6th January 2024, the Chancellor’s cut to National Insurance comes in, meaning less tax in your January pay packets!

For employees, the NI rate has been lowered from 12% to 10%, saving the average worker (earning £34,963 per year) £447.86 in Class 1 contributions over the year, that’s equivalent to £8.61 per week.

However, because of the freeze on tax thresholds until 2028, even though there is a reduction in National Insurance, the government has not yet adjusted income tax thresholds inline with inflation. It’s assumed that the government will have raised these in line with inflation, but we won’t know for sure until the Spring Budget announcements.

This would mean that workers would be just £2.28 better off per week, saving a total of £139.46 over the year, because of the freeze.

Rachael Griffin, tax and financial expert at Quilter has said: “Getting more money into people’s pockets is key, and thawing the frozen income tax thresholds could help considerably.”

“For the time being, the uptick in monthly take home following the NI cut will help ease the strain on people’s personal finances – albeit only marginally.”

According to the Office for Budget Responsibility, if tax brackets remain frozen, by the 2028/29 tax year, about 7.5 million taxpayers will be paying the higher 40% tax rate. This is nearly double the 3.8 million people in the 2019/20 tax year.

The reduction in National Insurance will cost the Treasury around £9 billion a year.


Impact of cuts to National Insurance contributions:

Salary 12% 10% Saving
£30,000 £2,091.60 £1,743.00 £348.60
£34,963* £2,687.16 £2,239.30 £447.86
£40,000 £3,291.60 £2,743.00 £548.60
£50,000 £4,491.60 £3,743.00 £748.60
£100,000 £5,518.60 £4,764.60 £754.00


*average salary


National Insurance contributions for self-employed individuals are also being reduced from 9% to 8% on any profits between £12,570 and £50.270. This will impact approximately 2 million people.


For more information on points mentioned in the Autumn Statment, click here.


Information taken from Croner-I Accountancy Daily, Article by Will Drysdale ‘Average earner will be £450 better off from Saturday’.


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