What do National Insurance cuts mean for your wages?

The government is reducing the amount of National Insurance average working people in the UK must pay.  

In November, Chancellor Jeremy Hunt announced a tax cut for employees and the self-employed as part of our long-term plan to grow the economy.  

Today, Employee National Insurance was cut from 12% to 10%, meaning 27 million employees will receive more take-home pay.

The change means those earning the average salary of £35,400 will receive £450 more in their pay packet. 

Taxes for the self-employed will be also cut and reformed from April – saving the average self-employed person on £28,200 a year £350 in 2024/25. 

How much more take-home pay will I receive?

  • A senior nurse with five years of experience on £42,618 will receive an annual gain of £600.  
  • An average full-time nurse on £38,900 will receive an annual gain of over £520.  
  • An average police officer on £44,300 will receive an annual gain of over £630.  
  • A typical junior doctor on £63,000 will receive an annual gain of over £750. 
  • A cleaner working night shifts on £21,000 will receive a gain of £170.  
  • A typical self-employed plumber on £34,400 will receive an annual gain of £410. 
  • An average teacher on £44,300 will receive an annual gain of over £630. 
  • A hard-working family with two earners on the average earnings of £35,404 will be £900 better off. 

Find out more about your National Insurance rate and category here.

What does this mean for employees?

The main rate of Employee National Insurance tax will be cut by 2p for every £1 you earn from 6 January 2024. 

For employees paying the basic rate of tax, this means reducing the combined tax rate – made up of income tax and National Insurance – to 30%, the lowest since the 1980s.  

These changes mean that for those on average salaries, personal taxes would be lower in the UK than every other G7 country, based on the most recent OECD data. 

Employees should see an increase in their take home pay in January, as their employers make changes to their payroll system. 

What does this mean for the self-employed?

We are cutting the main rate of self-employed National Insurance (Class 4 NICs) by 1p from 9% to 8% from 6 April 2024, for around two million people.  

This is worth £350 for the average self-employed person on £28,200. 

From 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs, but will continue to receive access to contributory benefits including the State Pension. 

This is a tax simplification that effectively abolishes Class 2 NICs by removing the requirement for self-employed people to pay. 

Use our tool to find out how the January 2024 National Insurance contributions changes will affect you.