The Chancellor’s Spring Budget 2024 announced a 2% cut in the main rates of National Insurance for both employees and the self-employed from 6 April 2024.
Class 1 NIC
Class 1 NICs apply to those with annual earnings between £12,570 and £50,270, currently at a rate of 10% (reduced from 12% in the Autumn 2023 statement with effect from 6 January 2024). For those earning above this level, the rate on all additional earnings remains at 2%.
From 6 April 2024, the main rate will drop a further two percentage points to 8%, which will generate a maximum saving of £63 per month thereafter (£754 per tax year).
Employers also pay NICs, currently at a rate of 13.8% on amounts over the lower threshold, but no changes have been announced so this rate will remain.
Class 4 NIC
For the self-employed, Class 4 NIC applies from an annual lower threshold of £12,570 to an annual higher threshold of £50,270, currently at a rate of 9%. This rate was due to reduce to 8% with effect from 6 April 2024. For those earning above this level, the rate remains at 2% on all additional profits.
From 6 April 2024, the rate will drop a further 2% to 6%. For someone already paying Class 4 NIC, this represents a tax saving of £20 for every £1,000 of profit in the main Class 4 NIC band, up to a maximum of £754 per year. The government has already abolished Class 2 NIC from 6 April 2024, so the combined changes will offer a welcome financial uplift for the new tax year.
