In the recent chancellor’s budget 6 March 2024, there was one significant reduction in tax. This was a reduction from 10% to 8% in National Insurance contributions (NIC) for the majority of employees in the United Kingdom – there are no differences between England, Wales, Scotland and Northern Ireland. This started from April 6 2024.
It is important therefore to understand what the implications are for everyone as there are differences depending on your type of employment status and your earnings. In this article we look at what the recent changes might mean for you.
National Insurance (NI) is a government tax for all people over the age of 16 who either as an employee earn more than £242 per week or as self-employed who make a profit of more than £12,570 a year.
The tax is used to count towards the State Pension entitlement as well as certain contribution-based state benefits such as Jobseeker’s Allowance, Employment & Support Allowance, Maternity Leave and Bereavement Support Payment.
Here’s a link to a more detailed breakdown of what NIC is used to support >>
There are different types of National Insurance known as classes which depend on employment status and earnings.
If you’re employed, you typically will pay Class 1 National Insurance contributions:
You Pay From 6 Jan 2024 From 6 April 2024
£242 to £967 10% 8%
a week (£1,048 to
£4,189 a month)
Over £967 a week. 2% 2%
(£4,189 a month)
If you are self-employed
If you are self-employed and your profits are more than £12,570 then from 6 April 2024 , you will no longer have to pay Class 2 National Insurance of £3.45 per week. You can continue to make voluntary contributions to ensure that you have enough qualifying years to claim the full state pension.
Currently Class 4 National Insurance is 6% on profits between £12,750 and £50,270 (9% up to 5 April 2024) and 2% on profits over £50,270.
Class 3 is a voluntary contribution. More information about classes can be found here >>
There are other National Insurance rules if you are:
Click on each of the above for more details about each circumstance.
If your circumstances change such as being unemployed, you start or stop being self-employed, or your personal details change (e.g. change of address) then you must inform HMRC so that they can make the necessary adjustments.
For all of the above to work, everyone who qualifies is given a unique National Insurance number. It never changes throughout your life. It is therefore important that you know and can easily access this number. It can be found on:
Click here for more information about your National Insurance number >>
If you would like to discuss any of the above as it relates to the rest of your financial circumstances please get in touch. You can call us on 0131 226 6700.
The Financial Conduct Authority does not regulate Tax Planning.
The value of an investment may go down as well as up, and you may get back less than you originally invested. Past performance is not a reliable indicator of future returns.
