Today millions of workers on monthly salaries will have a little more cash in their pockets as the Government’s Spring Budget cut to National Insurance appears in April’s pay-packets. Since Autumn 2023, National Insurance Contributions (NICs) for workers have been slashed by a third – the largest cut to employee and self-employed NICs in history.
The main rate of employee National Insurance has been cut for 27 million workers from 12% to 8%, saving the average employee on £35,400 over £900 a year. An average full-time nurse will save £1,053, a typical junior doctor £1,508 and an average teacher £1,270.
These cuts are possible because the economy is turning a corner, thanks to the Government’s decisive action that has helped bring inflation down from 11.1% to 3.2% and ensure borrowing costs start to fall. Because of this progress, the Government can now cut taxes to reward work and grow the economy.
This marks another step towards the longer-term ambition to end the unfair double tax on work and abolish employee and self-employed NICs altogether.
These tax cuts – worth over £20 billion a year – have been achievable while protecting spending including keeping the Triple Lock.
Craig Mackinlay MP commented:
“National Insurance is an unfair double tax on work, and cutting it is the fairest and best way to incentivise work and drive growth.
“That’s why I’m pleased the tax burden on workers is falling as a result of the Chancellor reducing National Insurance for both employees and the self-employed.
“The effective personal tax rate for an average full-time employee was 23.6 per cent in 2010, and thanks to these NICs cuts will fall to 19.6 per cent by the end of the forecast in 2028-29. These changes give the average earner the lowest effective personal tax rate since 1975 – lower than in America, France, Germany or any G7 country.
“A full time National Living Wage worker’s take home pay is now 35 per cent greater in real terms than it was in 2010 due to the successive increases in the National Living Wage and the tax cuts that have been delivered.
“I’ll continue to urge the Chancellor to cut taxes still further in the months and years ahead.”
Chancellor of the Exchequer Jeremy Hunt said:
“We’re on the right track – we’ve been able to slash National Insurance to return hundreds of pounds back into the pockets of hard-working Brits because of the decisions we’ve made to manage the economy responsibly.
“Over the years ahead we want to get rid of National Insurance completely for workers – it is an unfair double tax on work and we’ve shown we can protect spending on public services while eliminating it.”