EMPLOYMENT
National Insurance contributions The Chancellor has previously announced major changes to the National Insurance contributions (NICs) system. Employees and NICs Following the Autumn Statement in 2023 the government cut the main rate of Class 1 employee NICs from 12% to 10% from 6 January 2024. The government has further cut the main rate of Class 1 employee NICs from 10% to 8% from 6 April 2024. Comment According to the government, building on changes made at the Autumn Statement the government has cut taxes again for 29 million people with the average worker on £35,400 receiving a cut in 2024/25 of over £900. The self-employed and NICs The self-employed generally have to pay two forms of NICs: Class 2 and Class 4. Firstly, the government will amend Class 2 self- employed NICs from 6 April 2024. This means that, from 6 April 2024:
• Self-employed people with profits above £6,725 will continue to get access to contributory benefits, including the State Pension, through a National Insurance credit, without paying NICs. • Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension will continue to be able to do so. Comment This will mean that a self-employed person who currently pays Class 2 NICs will save at least £192 per year. Secondly, the government will cut the main rate of Class 4 self-employed NICs from 9% to 6% from 6 April 2024. Comment This will benefit around two million individuals, recognising the contribution of the self-employed to the economy and ensuring that work pays for all. According to the government, combined with the removal of the requirement to pay Class 2 NICs, this will save an average self-employed person on £28,000 £650 a year.
Employment
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