MILLIONS of workers can expect to see a boost to their pay packet after new tax cuts – and our calculator helps you check by how much.
Jeremy Hunt abolished some National Insurance Contributions (NICs) in the Autumn Statement.
A massive tax cut to National Insurance is coming for 28million Brits in January.
The long-awaited personal tax cut means that the rate of NICs will come down from 21% of earnings to 10% of earnings.
It means that someone on an average salary of £35,000 will save over £450.
It is also good news for millions of self-employed workers who will also get to keep more of their hard-earned cash.
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We explain below who will benefit from the cuts and how much you can expect your new earnings to be.
How much is National Insurance getting cut by?
The cuts will affect you differently depending on how much you earn and whether you are a full-time worker, or self-employed.
Mr Hunt has announced that Class 2 National Insurance, a flat rate compulsory charge that is currently set at £3.45 a week is set to be abolished.
Also, one percentage point is to be cut off from the rate charged for Class 4 NICs.
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The Chancellor said that this change would save two million self-employed workers £350 a year from April.
NICs are also paid by employed workers over the age of 16.
A two percentage cut is to be made to the main rate of National Insurance from January giving the average employee a pay rise of £450.
How will the National Insurance cuts impact you?
If you are not self-employed and work for a company or organisation, you will be paying the main rate of National Insurance as mentioned above.
This cut is set to come into force from January 6, 2024, so you should start to see a boost to your wages from then.
The Class 2 and Class 4 NI cuts are paid by self-employed Brits making a profit of £12,570 or more a year.
The abolishing of Class 2 NICs will save the average self-employed person £192 a year.
In a second boost for the self-employed, cutting one percentage point off Class 4NICs will save them around £350 a year from April.
How much will you earn after the National Insurance cuts?
The amount of National Insurance you pay depends on your employment status and how much you earn.
If you're employed the company you work for will deduct the tax and pay HMRC for you.
You will be able to see your contributions on your payslip.
Your National Insurance number is used to make sure that the correct contributions are made to your name.
If you want to work out how much you will earn when the changes come into force you can use our calculator with tax experts Blick Rothenberg HERE.
If you're self-employed you need to complete a self-assessment tax return and pay NICs and income tax yourself.
Laura Suter, head of personal finance at AJ Bell said: "Jeremy Hunt’s decision to cut National Insurance will save an employed working couple up to £1,500 a year from the new year."
Below we have some examples of the changes that both employed and self-employed workers can expect to see.
An employed person on £20,000 a year currently pays £891.60 in NICs.
From January when the cuts are made, they will pay £743 which is a saving of £148.60.
A self-employed person earning £20,000 paying the current Class 2and Class 4 NICs pays £848.10.
In April they will pay £594.40, saving a significant amount of £253.70.
You can catch up on all the latest news and changes following the Autumn Statement in our live blog.
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