January 2024 National Insurance Tax Cut

January 2024 National Insurance Tax Cut
The main rate of national insurance has been reduced by 2% from 6th Jan 2024, with 27 million UK taxpayers set to benefit.
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April 2024 Update: Note that National Insurance was cut on two separate occasions in 2024. This article refers to the first 2p cut that took place in January 2024.

Starting 6th Jan 2024, around 27 million employees in the UK will pay 2% less national insurance contributions thanks to a rate cut from 12% to 10%. This applies to income between £12,571 and £50,270.

The 2% rate cut results in a saving of around 12-16% in National Insurance paid to HMRC, depending on income level. The maximum saving is around £754 per year for those earning over £50k, although those on lower incomes benefit slightly more in terms of relative savings.

Example NI savings:

  • Income of £25,000: £248 (16.64%) NI saving
  • Income of £35,000: £448 (16.65%) NI saving
  • Income of £50,000: £748 (16.66%) NI saving
  • Income of £70,000: £754 (maximum) (15.03%) NI saving
  • Income of £100,000: £754 (maximum) (13.66%) NI saving
  • Income of £150,000: £754 (maximum) (11.57%) NI saving

Although taxpayers might hope to save up to £754 per year in NI contributions, frozen income tax bands (and a frozen personal allowance threshold) in spite of hefty inflation means the overall tax burden has still increased. Some might argue that such a non-trivial cut is better than nothing.

Saving Tool UK Tax Calculations Updated

The Saving Tool UK Tax calculations have been updated today (8th Jan 2024) to reflect the 2% reduction in main National Insurance rate. Simply enter your income information and the reduction will automatically apply.