January 2024 National Insurance Tax Cut
Starting 6th Jan 2024, around 27 million employees in the UK will pay 2% less national insurance contributions thanks to a rate cut from 12% to 10%. This applies to income between £12,571 and £50,270.
The 2% rate cut results in a saving of around 12-16% in National Insurance paid to HMRC, depending on income level. The maximum saving is around £754 per year for those earning over £50k, although those on lower incomes benefit slightly more in terms of relative savings.
Example NI savings:
- Income of £25,000: £248 (16.64%) NI saving
- Income of £35,000: £448 (16.65%) NI saving
- Income of £50,000: £748 (16.66%) NI saving
- Income of £70,000: £754 (maximum) (15.03%) NI saving
- Income of £100,000: £754 (maximum) (13.66%) NI saving
- Income of £150,000: £754 (maximum) (11.57%) NI saving
Although taxpayers might hope to save up to £754 per year in NI contributions, frozen income tax bands (and a frozen personal allowance threshold) in spite of hefty inflation means the overall tax burden has still increased. Some might argue that such a non-trivial cut is better than nothing.
Saving Tool UK Tax Calculations Updated
The Saving Tool UK Tax calculations have been updated today (8th Jan 2024) to reflect the 2% reduction in main National Insurance rate. Simply enter your income information and the reduction will automatically apply.
