National Insurance Rates Cut Again

The headline news from the Spring Budget was further cuts to national insurance contributions (NIC) of 2% each for self-employed taxpayers and employees.

The main rate of primary Class 1 NIC paid by employees on earnings between £12,570 and £50,270 per year will be cut from 10% to 8% from 6 April 2024. Combined with the 2% cut announced in the Autumn Statement 2023, this will save the average worker earning £35,400 over £900 a year.

Self-employed taxpayers will receive a further 2% reduction in Class 4 self-employed NIC, on top of the 1% cut announced at Autumn Statement 2023. This means that from 6 April 2024 the main rate of Class 4 NIC for the self-employed will now be reduced from 9% to 6%. Combined with the abolition of the requirement to pay Class 2, this will save an average self-employed person earning £28,000 around £650 a year.

As announced in the Autumn Statement, self-employed traders with profits above £12,570 will no longer pay Class 2 NIC but will continue to receive access to contributory benefits including the state pension.

Those with profits between £6,725 and £12,570 will continue on this basis. Those with profits under £6,725 who choose to pay Class 2 NIC voluntarily to protect their entitlement to contributory benefits including the state pension will continue to be able to do so.

The rates for the 2024-25 tax year are as follows:

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