UK Chancellor Announces National Insurance Cuts

Changes to take effect from January 2024, with average savings of over £450 a year for workers and £350 for self-employed individuals.

UK Chancellor Jeremy Hunt has announced a reduction in the Class 1 National Insurance rate from 12% to 10% effective from January 6, 2024, resulting in an average saving of over £450 a year for workers earning between £12,570 and £50,270.
Changes to National Insurance for self-employed workers will also come into effect from April 2024, with Class 2 contributions being abolished and the Class 4 rate dropping from 9% to 8%, leading to an average annual saving of £350 for two million self-employed workers.
Despite these reductions, some analysts argue that workers will only be marginally better off due to frozen tax thresholds and fiscal drag, with some earners seeing a pay boost of just £2.68 a week.
The number of self-employed workers has dropped by around 700,000 since the end of 2019, attributed to the rising tax burden and disruption caused by Covid-19 and changes to off-payroll tax rules known as 'IR35'.
National Insurance contributions fund various state benefits, including the state pension, with the amount of state pension received dependent on the number of 'qualifying years' of contributions made.