Just a quick reminder that the reduction of Class 1 National Insurance Contributions (NICs) will begin on January 6, 2024. From this date, the amount paid on Class 1 NICs will fall from 12% to 10%. This is the main rate of NICs paid by employees through PAYE.
The change was part of a range of measures announced by Chancellor Jeremy Hunt as part of the Autumn Statement in November, which included cuts to other forms of NICs including a reduction of Class 4 NICs for the self-employed from 9% to 8% from April 6, 2024, and the removal of the requirement to pay Class 2 NICs from the same date. The Government will ensure that contributory benefits, such as the State Pension, will be maintained.
Class 2 NIC’s Can Still Be Paid Voluntarily
There is one group of people who pay Class 2 NICs on earnings below £6,725 so they can access the contributory benefits, and these people will still be able to make these payments voluntarily.
The Government claims these combined measures will cut tax for around 29m people in the 2024/25 tax year, giving the average employee on £35,400 more than £450 extra in their pocket, and saving the average self-employed person on £28,200 an extra £350. But the impact on individual taxpayers will vary, and this doesn’t take into account any other measures that affect how much tax each of us pays, such as ‘fiscal drag’ where tax thresholds fail to rise significantly and result in higher tax payments as wages increase.
Let Us Help You
If you want to know what you can expect personally in relation to these changes, then please get in touch and we will be happy to offer you the help and guidance you need.
