Our last National insurance blog listed the expected national insurance contribution rates for 2024; however, from what has recently been changed in the Chancellor’s Spring Budget for 2024 As had been widely expected, the Chancellor announced further changes to National Insurance contributions (NIC) rates for employees and the self-employed.
National insurance contributions cut for Employee’s
There will be a further 2% cut in the primary rate of Employee National Insurance from 6 April 2024. This will see Class 1 NICs reduced by 2% from 10% to 8%. This is on top of the earlier reduction, announced as part of the Autumn Statement measures, which reduced Class 1 NICs from 12% to 10% on 6 January 2024. When both of these changes are taken together, the Treasury say this will save the average worker on £35,400 over £900 a year.
National insurance contributions cut for self-employed
The rate of Class 4 national insurance contributions (the class of NIC paid by self employed individuals) has been cut from 9% to 6% from April the 6th 2024 (a further decrease of 2% from the reduction to 8% set out in his autumn statement
Combined with the previously announced abolition of the requirement to pay Class 2 NICs from 6 April 2024, this will save an average self-employed person making profits of £28,000, approximately £650 NIC a year.
What do these cuts mean for you
If you're employed this is how much you will pay in national insurance contributions.
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Annual salary
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Annual cost at rates between 6 April 2023 and 5 January 2024
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Annual cost at rates from 6 January 2024 to 5 April 2024
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Annual cost at rates from 6 April 2024 to 5 April 2025
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Annual saving from 6 April 2024 compared to now
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£25,000
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£1,491.60
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£1,243
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£994.40
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£248.60
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£35,000
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£2,691.60
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£2,243
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£1,794.40
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£448.60
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£50,000
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£4,491.60
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£3,743
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£2,994.40
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£748.60
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£75,000
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£5,018.60
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£4,264.60
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£3,510.60
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£754
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£85,000
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£5,218.60
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£4,464.60
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£3,710.60
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£754
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£100,000
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£5,518.60
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£4,764.60
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£4,010.60
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£754
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If your self employed this is how much you will pay in nationals insurance contributions.
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Yearly profit
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What you pay in 2023/24
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What you'll pay in 2024/25
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Under £6,725
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£3.45 a week if you choose to
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£3.45 a week if you choose to
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Between £6,725 and £12,569
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Nothing – but you're still entitled to national insurance credits
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Nothing – but you're still entitled to national insurance credits
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Between £12,570 and £50,270
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9% + £3.45 a week
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6%
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Over £50,270
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9% on everything earned between £12,570 and £50,270, 2% on everything above that
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6% on everything earned between £12,570 and £50,270, 2% on everything above that
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Contact us
If you’re unsure on how these new national insurance contributions will affect you or you’re a self employed individual and are unsure how much you need to pay towards your class 4 national insurance contributions, please contact our specialist tax team today who will help explain the new thresholds to you and also help your correctly report your national insurance contributions on your self assessment tax return if needed.