National Insurance Contributions (NIC)

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In his 2022 Autumn Statement, the Chancellor announced that the thresholds for NIC would remain fixed until 2027/28. In the 2023 Autumn Statement he announced a reduction in the main rate of Employees’ Class 1 NIC from 12% to 10% to take effect from 6 January 2024; in the Spring Budget he has cut the rate further to 8% with effect from 6 April 2024.

In the Autumn Statement the Chancellor announced an intention to cut Class 4 NIC for the self-employed from 9% to 8% from 6 April 2024, but he has now taken this further and reduced the main rate to 6%. These changes constitute a significant tax reduction for people in work, amounting to a maximum £1,508 for an employee earning above the Upper Earnings Limit, and a maximum of £1,131 for a self-employed person. These cuts offset the effective income tax increases arising from the freezing of personal allowances, and are targeted at people in work – an income tax cut would also benefit those who do not pay NIC on their income, such as landlords and pensioners.

The upper limits for employee and self-employed contributions remain aligned with the point at which 40% income tax is payable (£50,270 per year, or £967 per week), and are frozen at that level until the end of 2027/28.

Because the Scottish higher rate of income tax applies at a lower level than in the rest of the UK (above £31,092 of taxable income in excess of personal allowance rather than above £37,700), Scottish taxpayers can be liable to higher rate income tax and full primary NIC on the same income (42% plus 8% in 2024/25).

Find more from the spring budget below:

The Spring Budget 2024 is here!