THE UNITED KINGDOM
National Insurance Contributions (NICs)At Autumn Statement 2023, Chancellor Jeremy Hunt announced that the headline rate of Class 1 NICs would be reduced. He added that he wanted people to “see the benefit in their payslips” sooner, rather than having to wait for the new tax year. He subsequently introduced urgent legislation (the National Insurance Contribution (Reduction in Rates) Bill 2023-24) so that the measure could be implemented on 6 January.
Following agreement by both Houses on the text of the National Insurance Contributions (Reduction in Rates) Bill, the bill received Royal Assent on 18 December and is now an Act of Parliament.
The National Insurance Contributions (Reduction in Rates) Act, 2023 implements three changes:
· A cut in the primary Class 1 NICs main rate paid by employees from 12% to 10%. This rate cut would apply from 6 January 2024.
· A cut in the main rate of NICs paid by the self-employed (Class 4 NICs) from 9% to 8%. This rate cut would apply from 6 April 2024.
· Cancelling the requirement of the self-employed to pay the flat rate NICs charge (Class 2 NICs), which applies when someone’s annual profit exceeds a set threshold (the ‘lower profits threshold’). This threshold is currently £12,570. This change would take effect from 6 April 2024.
Class 1 National Insurance contribution rates
The Class 1 National Insurance rates for employed people for the 2023 to 2024 tax year are:
Employer contribution rates remain the same.
To view the National Insurance Contributions (Reduction in Rates) Act, 2023, follow the link. |
