National Insurance Rates Cut
The Chancellor has announced cuts to national insurance contributions (NIC) for self-employed taxpayers and employees.
The headline news from the Autumn Statement was the reduction of primary Class 1 and Class 4 NIC and the removal of compulsory Class 2 NIC.
The main rate of primary Class 1 NIC paid by employees on earnings between £12,570 and £50,270 per year will be reduced from 12% to 10%.
Instead of waiting until the start of the next tax year, this change will be effective from 6.1.24, so you will need to update your payroll software before the January pay run to ensure the correct rate of Class 1 NIC is deducted from employees.
For self-employed taxpayers the main rate of Class 4 NIC will be reduced by 1% from 9% to 8% from 6.4.24.
In addition to this, 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.
According to the Chancellor these NIC reductions will amount to a saving of £350 per year for the average self-employed.