Changes to National Insurance

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The Government has announced that National Insurance rates for millions of working people in the UK will be reducing in 2024. This is to help with the rising cost of living. The changes take effect from 06 January 2024, for employees and from the 06 April 2024, for self-employed workers.

Instead of the current 12%, employees will pay National Insurance at a rate of 10% on earnings between £12,571 and £50,270, from 6 January 2024. 

To put this into context, the reduction will mean that an employee earning the national average wage of £35,400 per annum, will pay around £450 less National Insurance in 2024, compared to 2023. 

Instead of the current 9%, self-employed workers will pay National Insurance at a rate of 8% on profits between £12,571 and £50,270, from 06 April 2024. 

To put this into context, the reduction will mean that a self-employed worker making the national average profit of £28,200 per annum, will pay around £350 less National Insurance in 2024, compared to 2023. Self-employed workers will also no longer have to pay Class 2 National Insurance from 06 April 2024. This additional change is expected to reduce payments by a further £192 per annum, for the average self-employed worker. 

Unfortunately, workers who also receive Universal Credit (or will be shortly migrated over to Universal Credit), are likely to see a reduction in payments in 2024 due to the above changes to National Insurance. This is because net earnings and self-employed profits (i.e., income after tax and National Insurance), are considered when calculating Universal Credit payments. 

Again, to put this into context, an employee earning the national average wage of £35,400 per annum, could see a reduction of around £250 per annum in their Universal Credit payments. And a self-employed worker making the national average profit of £28,200 per annum, could see a reduction of around £300 per annum. However, please note that these calculations do not take into account any anticipated Universal Credit rate uplifts for 2023/24.

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