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Spring Budget 2024: Workers to pay less national insurance from April – but some will still be worse off due to frozen personal tax thresholds

Workers will pay less in national insurance from 6 April, the Chancellor Jeremy Hunt has announced in today's Spring Budget. Around 29 million workers are set to benefit from the change, which will see contributions cut from 10% to 8% for employed workers and from 9% to 6% for self-employed workers.

However, some employed workers will still be worse off overall due to the continued freezing of tax thresholds – we've everything you need to know below.

Most employees will pay less in national insurance from 6 April 2024

National insurance contributions (NICs) will be cut from 10% to 8% on earnings of between £12,570 and £50,270 a year, the Chancellor has confirmed. The Government plans to bring forward legislation next week, so that the change can take place from 6 April 2024.

This is the second cut to national insurance this year – it was cut from 12% to 10% on 6 January 2024, as announced in the Autumn Statement.

You don't have to pay national insurance on earnings below £12,750, while there's no change to the 2% national insurance rate on earnings over £50,270. 

To find out how much tax you currently pay, as well as what you'll pay in 2024/25, use our National insurance and income tax calculator

How much you'll pay in NICs if you're employed

Annual salary Annual cost at rates between 6 April 2023 and 5 January 2024 Annual cost at rates from 6 January 2024 to 5 April 2024 Annual cost at rates from 6 April 2024 to 5 April 2025 Annual saving from 6 April 2024 compared to now
£25,000 £1,491.60 £1,243 £994.40
£35,000 £2,691.60 £2,243 £1,794.40 £448.60
£50,000 £4,491.60 £3,743 £2,994.40 £748.60
£75,000 £5,018.60 £4,264.60 £3,510.60 £754
£85,000 £5,218.60 £4,464.60 £3,710.60 £754
£100,000 £5,518.60 £4,764.60 £4,010.60 £754

You do not pay any NICs on the first £12,570 of earnings and the rate for earnings above £50,270 is 2% (which remains unchanged). For the full list of rates, see our Tax rates guide.

Income tax and national insurance thresholds are frozen until 2028

Both national insurance and income tax thresholds, which determine when you start paying each rate of tax, have been frozen since 2021. They're currently planned to stay frozen until April 2028. 

But this means workers can lose out in a process known in economic jargon as 'fiscal drag'. Here's founder Martin Lewis to explain what this means in practice: "What freezing the threshold does is that it means no matter what you earn, as your earnings increase, a bigger proportion of your earnings goes on tax. And that's how the Chancellor makes money from it."

As a result of today's announcement, employed workers earning between £26,000 and £60,000 in the 2024/25 tax year will gain more from the national insurance cut than they lose from threshold freezes, according to analysis from the Institute for Fiscal Studies (IFS).

But for those earning between £12,750 a year – when national insurance becomes payable – and £26,000, or for those earning more than £60,000, the cut is offset by the frozen thresholds, so there's no gain. See the graph from the IFS below:

Note: We asked the IFS why the chart shows a rise in tax liability for those earning between £9,100 and £12,570 – given that you don’t have to pay any NICs or income tax if you earn under £12,570. It told us the chart includes the impact of changes to employer NICs. The secondary threshold at which these start to be paid has been cut (in real terms) to £9,100 a year, and the IFS has assumed that this tax rise is fully passed through to employees.

Self-employed workers will also pay less in tax from 6 April 2024

The rate of 'class 4' national insurance contributions, which is the main rate paid on self-employed profits of between £12,570 and £50,270, will be cut from 9% to 6% from 6 April. This rate had been due to fall to 8% from 6 April, as set out in the Autumn Statement – but Mr Hunt has taken it one step further today. 

As also announced in the Autumn Statement, mandatory 'class 2' contributions – currently £3.45 a week – will be scrapped. However, those earning less than £6,725 a year can still choose to pay class 2 NICs to gain access to certain benefits, including the state pension. Those earning between £6,725 and £12,570 are entitled to the national insurance credits without having to pay the tax.

The additional 2% rate on earnings over £50,270 will remain. For what you'll pay from 6 April 2024 compared to now, see our table below:

How much you'll pay in NICs if you're self-employed

Yearly profit What you pay in 2023/24 What you'll pay in 2024/25
Under £6,725 £3.45 a week if you choose to £3.45 a week if you choose to

Between £6,725 and £12,569 Nothing – but you're still entitled to national insurance credits  Nothing – but you're still entitled to national insurance credits 
Between £12,570 and £50,270 9% + £3.45 a week 6%
Over £50,270 9% on everything earned between £12,570 and £50,270, 2% on everything above that 6% on everything earned between £12,570 and £50,270, 2% on everything above that

Some advanced national insurance rules are complicated. See the HM Revenue & Customs website for full rates. Most self-employed people pay national insurance through self-assessment.

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