…for National Insurance for the self-employed at least! Class 2 National Insurance contributions are currently paid, at a rate of £3.45 per week, by the self-employed with profits above £12,570, and voluntarily by those with profits below £6,725 who wish to access contributory benefits such as the state pension.
In addition, the self-employed also pay Class 4 National Insurance contributions at 9% on profits between £12,570 and £50,270, and then 2% on any profits over £50,270.
From 6 April 2024, those with profits above £12,570 will no longer be required to pay Class 2 National Insurance contributions with no impact on their ability to access contributory benefits. However, those with profits below £6,725 can still choose to pay Class 2 National Insurance contributions to access these benefits.
In tandem to this change, the rate of Class 4 National Insurance contributions on profits between £12,570 and £50,270 will drop from 9% to 8%. The rate for profits above £50,270 will remain at 2%.
As previously announced in the Autumn Statement 2022, most National Insurance limits and thresholds will remain at their 2023/24 levels until 2027/28. These changes represent a tax cut of approximately £335 for the average self-employed person earning £28,200 a year.
Mid-year change of Class 1 National Insurance contributions for the employed
Currently, employees pay Class 1 National Insurance contributions as follows:
- 0% on the first £242 employment income per week (£1,048 monthly),
- 12% on their employment income between £242.01 and £967 per week (£1,048.01 to £4,189 per month), and
- 2% on their employment income above £967 per week (above £4,189 per month).
With effect from 6 January 2024, the rate of Class 1 National Insurance contributions on income between £242.01 and £967 per week (£1,048.01 to £4,189 per month) will reduce from 12% to 10%; all other rates will remain unchanged.
There has been no change announced to the rate of employer’s National Insurance rates.
As previously announced in the Autumn Statement 2022, most National Insurance limits and thresholds will remain at their 2023/24 levels until 2027/28.
These changes will require changes to payroll software with technical specifications to be published in due course and represent a £450 tax cut for the average worker earning £35,400 (rising to £750 for higher-rate taxpayers).
Contact Us
Please don’t hesitate to contact me or a member of my team if you have any questions regarding the above or any of the measures announced in the Autumn Statement.
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