In a move to ease financial burdens on UK households, the Government has implemented a historic National Insurance cut, providing relief for 27m people and resulting in yearly savings of hundreds of pounds per average household.
As of Saturday, 6 January 2024, the main rate of National Insurance has been reduced by 2p, dropping from 12% to 10%. This substantial reduction, exceeding 15%, equates to a £450 saving this year for the average salaried worker earning £35,400.
For a household with two average earners, the annual savings could be worth nearly £1,000, marking a positive impact on the disposable income of families nationwide.
The Government's decision to cut taxes reflects a broader strategy to stimulate economic recovery following the pandemic.
To assist individuals in understanding the implications of the tax cut, HMRC has launched an online tool. This tool, hosted on the Government's cost of living support website on GOV.UK, uses salary information to provide personalised estimates of potential National Insurance savings for employees.
In addition to this historic tax cut, further measures will apply later this year, including a National Insurance cut for 2m self-employed individuals, set to take effect on 6th April 2024. This move, worth £350 for the average self-employed person on £28,200, is part of the Government's commitment to supporting businesses and households alike.
Chancellor of the Exchequer, Jeremy Hunt, said:
"With inflation halved, we've turned a corner and are cutting taxes - starting with today's record cut to National Insurance worth nearly £1,000 for a household.
"From nurses and brickies, to cleaners and butchers, 27 million hard-working Brits will have a little more cash in their pockets."
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