In the recent Autumn Statement, the Chancellor announced a significant change to National Insurance contributions (NIC) for employees.
There will be a cut in the main rate of Employee National Insurance from 6 January 2024. This will see Class 1 NICs reduced by 2%, from 12% to 10%, in a change set to benefit some 27 million employees.
This reduction will only apply to annual earnings between £12,570 and £50,270, meaning that the maximum saving is £754 a year. Average earners, bringing home £35,400, will be £450 better off. As the main rate will be reduced from 6 January 2024, employees will, unusually, see a benefit before the start of the next tax year.
The policy paper released by HM Treasury on these changes also highlighted further examples of the savings that this change will create. We have listed these examples below.
- A senior nurse with 5 years of experience on £42,618 will receive an annual gain of £600.
- An average full-time nurse on £38,900 will receive an annual gain of over £520.
- An average police officer on £44,300 will receive an annual gain of over £630.
- A typical junior doctor on £63,000 will receive an annual gain of over £750.
- A cleaner working night shifts on £21,000 will receive a gain of £170.
- A typical self-employed plumber on £34,400 will receive an annual gain of £410.
- An average teacher on £44,300 will receive an annual gain of over £630.
- A hard-working family with 2 earners on the average earnings of £35,404 will be £900 better off.