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Ella Mower

Content Writer
Published: 05/01/2024
Person contemplating tax changes

With Employee National Insurance contributions set to be cut to 10% this month, find out when this change is taking place and how it will affect your finances.

Cuts to National Insurance, unveiled by Chancellor Jeremy Hunt as part of the Autumn Statement, are set to take place this month.

They form part of a larger package the Chancellor said will “attract £20 billion additional business investment a year” to the UK, but what does this particular change mean for your own finances?

When will National Insurance cuts take place?

Cuts to Employee National Insurance contributions will take place on 6 January 2024.

This is unlike other fiscal changes announced as part of the Autumn Statement, such as an increase to the state pension and an alteration to the ISA allowance, which are scheduled for the start of the new tax year in April.

Importantly, while cuts to National Insurance for the self-employed were announced in the Autumn Statement, these won’t come into effect until the new tax year on 6 April 2024.

How will your finances be affected?

If you’re an employee…

If you’re an employee of a company, you’ll see your Employee National Insurance contribution (Class 1 National Insurance) reduced to 10% from 12% in a change the Chancellor says will help “27 million people”.

As a result, the average worker on a salary of £35,400 will receive a tax cut of over £450 in the 2024/25 financial year, according to an example given in the Autumn Statement.

If you’re self-employed

Meanwhile, if you’re self-employed, you’ll see Class 2 National Insurance abolished, while Class 4 National Insurance is set to be cut by one percentage point to 8%.

According to examples provided in the Autumn Statement, together these changes will benefit around two million self-employed individuals, saving the average self-employed person on a £28,200 salary £350 in the 2024/25 tax year.

Remember, though, these particular tax cuts won’t take place until the start of the next fiscal year in April.

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Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.

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