An estimated 27 million employees will benefit from the Chancellor’s tax cuts this month, according to the Government.
Jeremy Hunt, Chancellor of the Exchequer, announced the cuts to Class 1 contributions in his autumn statement.
What does this mean and how does it affect you?
If you are over 16 and earning more than £242 per week from one job, you will be paying a ‘Class 1’ National Insurance contribution each month, which is automatically deducted by your employer.
As of 6th January 2024, the rate you pay has been reduced from 12% to 10%.
Prime Minister, Rishi Sunak said: “Today’s tax cuts will directly reward hard working people, putting £450 back in the pocket of the average worker and helping them make ends meet.”
I’m self-employed. Are there any changes for me?
If you are self-employed you’ll see a 1% reduction to your NI contributions, from 9% to 8%. This will be effective from April 2024.
From 6th April 2024, you’ll no longer have to pay class 2 contributions if your profit exceeds £12,570 and you will still receive access to contributory benefits like State Pension.
Examples of savings for employees:
Annual Salary | Savings |
£12,570 | £0 |
£15,000 | £48.60 |
£20,000 | £148.60 |
£35,000 | £448.60 |
£50,000 | £748.60 |
£100,000 | £754.00 |
You can also use this online tool to help you estimate your savings.
If you’d like more information, you can read the Government factsheet here.
You can reach out to DH Business Support today for payroll support.
Call us on 0330 088 1701 or email us at hello@dhbs.uk, where one of our payroll specialists will be happy to assist you.