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Budget 2024: Hunt confirms National Insurance cut of 2p

Budget 2024: Hunt confirms National Insurance cut of 2p
Matt Browning
Written By:
Matt Browning

As expected, Jeremy Hunt confirmed in his Budget speech that National Insurance (NI) will be cut by 2p.

In his address to Parliament, the Chancellor announced the main rate of employee NI will slide from 10% to 8% from 6 April. This reduction, followed by the 2p cut in the Autumn Statement, means the average worker on a salary of £35,400 will save £900 per year.

Hunt said this would impact 29 million workers and, if you are on the average wage, you’ll have the “lowest effective personal tax rate since 1975.”

NI rates will go down for self-employed workers too – following the 1p cut in the Autumn Statement last year, from 6 April the main rate of Class 4 National Insurance Contributions (NICs) will go down to 6%, after standing at 9% the year before.

The Government predicts this move, described by finance expert Sarah Coles as not so much a rabbit pulled out of a hat, but “a tatty-looking ferret dragged from a box” will save the average self-employed person on £28,000 per year around £650.

In his address, Hunt said the Office for Budget Responsibility (OBR) predicts the cut to NICs will increase the total hours worked by employees to the equivalent of almost 100,000 full-time workers by 2028-29.

While cutting the rate of NI could prove popular with many workers, it may not be for employees on either end of the salary scale. Those workers – coupled with pensioners – might not be cheering the news as much as the Government thinks, according to one finance expert.

National Insurance cut has ‘huge impact on single-earner households’

Laura Suter, the director of personal finance at AJ Bell, said: “Someone on £15,000 per year will save less than £50 per year on their National Insurance bill as a result of today’s reduction – and will save less than £100 per year if you combine today’s cut with the one made in the Autumn Statement.

“The highest earners will be feeling short-changed too, as someone on £100,000 per year will save the same amount as someone earning half that salary. While some may struggle to muster up much sympathy for those earning six figures, this move has a huge impact on single-earner households.”

Suter added: “A couple each earning £50,000 per year will see their combined National Insurance bill cut by almost £1,500 per year, but a sole earner on £100,000 will only save £754 per year.”