As of April 6th, 2024, changes outlined in the Spring Budget regarding National Insurance (NI) have come into play, with a 2% reduction in rates. This impacts both employed and self-employed individuals.
For ‘Class 1,’ employed individuals, the rate now stands at 8%, down from the previous 10%, applicable to earnings ranging from £12,570 to £50,270 annually. Similarly, ‘Class 4’ NI contributions for self-employed profits within the same income bracket will decrease from 9% to 6%.
Please be aware that if you’re paid monthly, you might face higher NI payments on irregular income, such as bonuses, since NI calculations are conducted monthly. Additionally, it’s important to note that NI does not apply to earnings below £12,570, while the 2% rate remains unchanged for earnings exceeding £50,270.
These recent adjustments signify the second National Insurance rate reduction this year, with rates previously lowered from 12% to 10% on January 6th, 2024.
While these changes present potential benefits, it’s essential to consider the freeze on income tax and NI thresholds, which may influence tax liabilities due to ‘fiscal drag.’
For further insights and to calculate your specific tax obligations, we have linked relevant pages from the government’s official website below.
Work out an employee’s National Insurance contributions – GOV.UK (www.gov.uk)
