- Millions of workers checking payslips will have seen reductions in National Insurance contributions (NICs)
- As the economy turns a corner, the government is claiming to reward hard work, with over £900 a year boost for typical worker
- They state it is another step in ‘long-term ambition to end unfair double tax on work’
There are currently 27 million employees in the UK, and Tuesday 30th April 2024, millions on monthly salaries now have a little more cash in their pockets, as the Spring Budget cut to National Insurance appears in April’s pay-packets. Since autumn 2023, National Insurance Contributions (NICs) has been slashed by a third – the largest cut to employee and self-employed NICs in history.
The main rate of employee National Insurance has been cut for 27 million workers from 12% to 8%, saving the average employee on £35,400 over £900 a year. An average full-time nurse will save £1,053, a typical junior doctor £1,508 and an average teacher £1,270.
These cuts are possible because of the claimed economy is turning a corner, along with inflation down from 11.1% to 3.2% helping borrowing costs to start to fall. Because of this progress, the government claims it can now cut taxes to reward work and grow the economy.
This marks another step towards the governments claimed longer-term ambition to end the unfair double tax on work and abolish employee and self-employed NICs altogether.
These cuts – worth over £20 billion a year – have been achievable while protecting spending including keeping the Triple Lock and the government has commitment to going further only when it’s possible to do so.
Prime Minister Rishi Sunak:
At the start of last year I made to pledge to half inflation. And because of the difficult decisions we have taken, inflation has more than halved and we are now able to reward work, and cut taxes for millions of workers who are seeing the benefit in their pay checks today.
We have now cut National Insurance by £900 because it’s unfair that workers pay double tax on their income. We need to make it much simpler and much fairer and we are going to continue cutting this tax until it’s gone – while continuing to protect pensioners with the triple lock and providing record levels of funding to the NHS.
Chancellor of the Exchequer Jeremy Hunt:
We’re on the right track – we’ve been able to slash National Insurance to return hundreds of pounds back into the pockets of hard-working Brits because of the decisions we’ve made to manage the economy responsibly.
Over the years ahead we want to get rid of National Insurance completely for workers – it is an unfair double tax on work and we’ve shown we can protect spending on public services while eliminating it.
This mean that for single individuals on average salaries, personal taxes will be lower in the UK than every other G7 country, based on the most recent OECD data.
The smart nature of the cuts will also help grow the economy by bringing more people into the labour market. The Office for Budget Responsibility (OBR) expects that, as a result of these combined cuts, total hours worked will increase by the equivalent of almost 200,000 full-time workers by 2028-2029.
Alongside the cuts to NICs, HMRC launched an updated online tool to help people understand how much they personally could save in National Insurance this year.
It is claimed that these cuts to reward work follow a raft of changes that came into force on 1st April 2025 and could save households up to £3,850 a year to help with cost-of-living while igniting the economy.
This includes a record increase in the National Living Wage from £10.42 an hour to £11.44, and a 12.3% drop in energy bills from the previous quarter. In addition, households can benefit from a separate increase to the Local Housing Allowance that will mean some of the poorest families on either Universal Credit or Housing Benefit will gain £800 a year on average.
Want to know more
- Use HMRC’s online tool to see how much employees could save on NICs following both the cuts in January and April.
- Visit the government’s cost of living support website.
- For more key facts, visit the personal tax factsheet.
Who does this help?
The combined cuts to National Insurance mean:
- a family with two earners on the average salary of £35,400 each will be better off by £1,826
- an average full-time nurse on £38,900 will be better off by £1,053
- a senior nurse with five years experience on £42,618 will be better off by £1,202
- the average police officer on £44,300 will be better off by £1,270
- a cleaner working night shifts on £21,058 will be better off by £340
- a typical junior doctor on £65,000 will be better off by £1,508
- a typical self-employed plumber on £34,361 will be better off by £846
- the typical teacher on £44,300 will be better off by over £1,270
As a result of National Insurance cuts at the last two fiscal events combined with the government’s cuts to the High-Income Child Benefit Charge:
- a couple with 2 school-aged children, both working full-time, one on £60,000 and one earning the average salary (£35,400) will receive an annual gain of £4,600.
- a couple with 2 school-aged children, both working full-time, one on £80,000 and one earning the average salary (£35,400) will receive an annual gain of £2,400.
- a single earner couple with 2 school-aged children, where one is working full-time on £62,000 will receive an annual gain of £3,500.
PAYadvice.UK 1/5/2025