Today sees a £10 billion National Insurance cut coming into effect.
According to the Government, 27 million people across the UK will benefit from a yearly tax cut worth hundreds of pounds from today, meaning a household with two average earners will save nearly £1,000 per year.
National Insurance contributions for employees will drop from 12% to 10% saving the average employee £450 a year on an annual salary of £35,400.
However according to research,when this cut is considered alongside the frozen tax thresholds this April, people earning between £12,570 and £26,000 will gain less,or even nothing, from the rate cut.
In a briefing released today the Institute for Fiscal Studies say
“This year, 2024, will see both the NICs rate cut and a tax increase via the planned freeze in income tax and NICs thresholds and allowances in April. Put the two together and this is, overall, actually a tax increase. But the effect will vary across people. An employee earning £35,000 will gain about £130 more from the NICs cut than they lose from this April’s freeze in thresholds. Those with slightly higher earnings will gain a bit more than this, whereas taxpaying employees earning less than £29,000 will almost all lose out. “
And financial guru Paul Lewis says
People earning £50,270 or more will save £754 a year, so be £62 a month better off. People working 25 hours on minimum wage will save 38p a week.
