The latest tax cuts will support the UK Government’s long-term strategy to sustainably grow the economy. Credit: Victor Moussa/Shutterstock.com.

The UK Government has decided to reduce the rate of National Insurance contributions (NICs) for more than 29 million workers in the country.

The move was announced by Chancellor of the Exchequer Jeremy Hunt in the Autumn Statement 2023.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

Related Company Profiles

View all

According to the statement, the main rate of Class 1 employee NICs will be cut from 12% to 10%, with effect from 6 January 2024.

This means that the average worker on £35,400 ($44,260) in the UK will receive a tax cut of more than £450 in the year 2024–25.

For Class 4 self-employed people, the main rate of NICs will be reduced from 9% to 8%, starting from 6 April 2024.

Currently, employees who earn more than £12,570 a year are required to pay 12% in NICs on their earnings of up to £50,270 and self-employed workers pay 9% in NICs, a Reuters report noted.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

The government has also decided to completely eliminate the “outdated” and “complex” Class 2 self-employed NICs in a bid to simplify the tax system.

According to the latest Autumn Statement, all these amendments together are expected to benefit more than two million self-employed individuals, allowing an average self-employed individual on £28,200 to save around £350 in 2024–25.

The new tax cuts are a part of the government’s long-term strategy to support economic growth and increase the number of people in the work system to prepare the UK’s labour market for addressing future needs.

The British Office for Budget Responsibility (OBR) has also forecasted that these changes will help boost the number of people in employment by 28,000 by 2028–29, the statement added.

According to Reuters, the latest cuts to social security contributions come after the British Government’s previously announced decision to freeze the earnings thresholds for National Insurance until April 2028.

This freezing of income thresholds is expected to push workers to pay higher amounts of National Insurance as their earnings rise, eventually raising more money for the government.