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What are the changes to National Insurance?

National Insurance contributions (NICs) are a crucial aspect of the UK's tax system, supporting various social security benefits. Recent updates announced in the Spring Budget 2024 have brought significant changes to NIC rates and thresholds, impacting both employees and self-employed individuals.

 

Effective from 6 April 2024, the main rates of primary Class 1 National Insurance contributions for employees will be reduced by 2 percentage points from 10% to 8%. Similarly, for the self-employed, the main rate of Class 4 National Insurance contributions will decrease by 2 percentage points from 8% to 6%.

 

These changes, announced as part of the Spring Budget 2024, aim to reduce the burden of National Insurance contributions on individuals with earnings over £12,570, including both employees and self-employed individuals with profits above the same threshold. By lowering the rates, the government seeks to provide tax relief for millions of taxpayers, stimulating economic activity and enhancing household incomes.

 

The reduction in NIC rates is expected to have positive impacts on both individuals and the economy. Around 29 million individuals are expected to benefit from the tax cuts, with the average employee on £35,400 receiving a tax cut of over £450 per year, and the average self-employed person on £28,000 seeing a tax cut of £310 per year.

 

At Ultra Tax Ltd, we understand the importance of staying up-to-date with changes to tax legislation. Our team of experts is ready to assist individuals and businesses in navigating these changes, ensuring compliance and maximising tax efficiency. Whether you have questions about the recent NIC

 changes or need assistance with tax planning and compliance, our dedicated professionals are here to help.

For further information or advice regarding the changes to National Insurance, you can contact us or reach out to nics.correspondence@hmrc.gov.uk.

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