National Insurance Contributions (NIC)
As recently as January 2024, the main rate of class 1 NIC paid by employees was reduced from 12% to 10%, along with a corresponding drop in the main rate of class 4 NIC paid by the self employed from 9% to 8%.
It was announced today that both the main rates of class 1 NIC and class 4 NIC would be cut by a further 2% each from April 2024. The main rate of class 1 NIC will therefore drop from 10% to 8% and the main rate of class 4 NIC will drop from 8% to 6%.
As a reminder, the main rate of both class 1 and class 4 NIC is payable on earnings/profits between £12,570 and £50,270.
These two recent cuts in January 2024 and April 2024 between them can result in over £1,500 in NIC savings potentially.
Already previously announced, the flat rate class 2 NIC that is also paid by the self employed (currently around £180 per year) is being scrapped from April 2024. Access to contributory benefits such as the state pension will continue for all self employed individuals with profits over £6,725 despite not paying any class 2 NIC. Those with profits under £6,725 can continue to elect to voluntarily pay class 2 NIC to retain these benefits.
Income Tax Rates
No changes were announced with regards to income tax directly.
We therefore have the same £12,570 tax free personal allowance, basic rate tax band (20%) to £50,270, higher rate tax band (40%) to £125,140 and additional rate tax band (45%) thereafter, as we have had in recent years.
The tax free personal allowance continues to be tapered between £100,000 and £125,140.
As previously announced, the tax free dividend allowance is reducing again in April 2024 from £1,000 to £500.
There were changes announced to the unpopular “high income child benefit charge” which you can read more on HERE.
Please click here to go back to our full Spring Budget 2024 analysis.
