Autumn Statement 2023 National Insurance Contributions
Published / Last Updated on 23/11/2023
The Chancellor announced the biggest overhaul to national insurance contributions (NICs) for both the employed and self-employed on record.
Employees NIC – From 6th January 2024
- Employee National Insurance (Class 1) Contributions (NICs) will be reduced from 12% to 10%. This should help 27 million workers.
- The Upper Earnings Limit (UEL), where national insurance contributions stop (for employees and self employed) at £967 per week and Upper Profits Limit (UPL) set at £50,270 pa (for both employees and self employed) remains frozen until April 2028.
- The Primary Threshold (PT) and Lower Profits Limit (LPL), when NICs become payable, will remain at £12,570 pa until April 2028.
- The Lower Earnings Limit – the point at which employees start to receive NIC credits, also remains frozen at £6,396 pa.
Employers NIC rates and allowances have not been reduced although with Employers Allowance i.e., an exemption for eligible employers to reduce their annual National Insurance liability by up to £5,000 anyway, so many small employers to not pay Employers NIC anyway.
Self Employed NIC – From 6th April 2024
- Self-employed people with profits above £12,570 will continue to pay Class 4 NICs but the rate is reduced from 9% to 8%.
- 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 will save £192 per year.
- Self-employed people with profits between £6,725 and £12,570 will continue to get access to contributory benefits including the State Pension through a National Insurance credit without paying NICs..
- Self-employed people with profits below £6,725 and others can continue to pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension.
- Self Employed with profits below £6,725 will pay £3.70 per week (increased by CPI from £3.45 per week.
- For those paying voluntarily Class 2, the rate Class 2 rate will remain the same at £3.45 per week for 2024-25.
- Self-employed This will mean that a self-employed person who pays Class 2 NICs every week will save at least £192 per year. Together with the cut to Class 4 NICs around 2 million self-employed people will benefit, with an average self-employed person on £28,200 saving £350 in 2024-25.
Comment
- We suggest this is yet another ‘carrot’ to encourage economically inactive people ‘back to work’ by even just running a self-employed micro business and earning less than then £6,275, you need only pay £3.70 per week NICs rather than not working and having to pay £17.45 per week Class 3 Voluntary contributions to get state pension credits and other contributory benefits.
- Or indeed get those who are already self employed with micro businesses to upscale and grow as they will now pay lower NIC overall.
