By: Shajil Kumar
The government’s Spring Budget cut to National Insurance contribution that kicks off with April’s pay-packets is expected to benefit 27 million employees.
The main rate of employee National Insurance has been cut to 8 per cent from 12 per cent. Those earning an annual income of £35,400 will save over £900 a year. An average full-time nurse will save £1,053, a junior doctor £1,508, and an average teacher £1,270.
The treasury department claims these cuts have been possible because the economy is turning a corner, with inflation down from 11.1 per cent to 3.2 per cent.
Since Autumn 2023, National Insurance Contributions (NICs) for workers have been slashed by a third – the largest cut to employee and self-employed NICs in history.
The also marks another step towards the longer-term ambition to end the unfair double tax on work and abolish employee and self-employed NICs altogether.
These tax cuts – worth over £20 billion a year – have been achievable while protecting spending.
The Office for Budget Responsibility 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 2028-29.
With these tax cuts, personal taxes in the UK would be lower than in every other G7 country, as per OECD data.
These cuts to reward work follow a raft of changes that came into force on April 1 and could save households up to £3,850 a year.
Prime Minister Rishi Sunak said, “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.
Chancellor of the Exchequer Jeremy Hunt said, “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.”
The government had earlier this month launched an updated online tool to help people understand how much they could save on National Insurance this year.
[TheChamp-Sharing]
