National Insurance cuts: How much more money will you take home each month?
22 November 2023, 18:00 | Updated: 22 November 2023, 18:39
Jeremy Hunt unveiled a cut to National Insurance in the Autumn Statement on Tuesday, saying he was giving a boost to the pay packets of millions of workers.
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The Chancellor slashed National Insurance by two percentage points in his latest plan for the British economy.
Mr Hunt told MPs: "If we want people to get up early in the morning, if we want people to work nights, if we want an economy where people go the extra mile and work hard then we need to recognise that their hard work benefits all of us.
“So today, Mr Speaker, I am going to cut the main 12% rate of employee National Insurance.
"If I cut it by 1 percentage point to 11%, that would be an extra £225 in the pockets of the average worker every year.
"But instead, I’m going to go further and cut the main rate of Employee National insurance by 2 percentage points from 12% to 10%. This change will help 27 million people.”
But how much does this move actually save you?
Read more: Percentage of workers’ pay going to taxman still at a record high, warns OBR
Rain Newton-Smith, Chief Executive, Confederation of British Industry said that the move on National Insurance would "give hard-pressed households some much needed breathing room".
But Shadow Chancellor Rachel Reeves said that people in work are "worse off" despite Mr Hunt's announcements. She added that the British public "will not be taken for fools".
The UK has become "world-following, not world-beating" under the Tories, she said.
Mr Hunt also said he is scrapping Class 2 National Insurance, paid by many self-employed workers, which would save the average self-employed person £192 per year.
Caller Daniel brands the Chancellor's Autumn Statement 'weak' and 'under-delivered'
He further announced self-employed people who pay "Class 4" National Insurance at 9% on all earnings between £12,570 and £50,270 will see that cut by 1 percentage point to 8% from April.
The overall tax burden in the UK remains on course to reach its highest level since the Second World War, despite cuts to national insurance announced by Jeremy Hunt in the autumn statement, figures suggest.
The burden is forecast to rise from the equivalent of 36.3% of GDP (gross domestic product, or the total value of the economy) in 2023/24 to 37.7% by 2028/29, according to the Office for Budget Responsibility (OBR).
The tax changes announced by Mr Hunt in his statement are estimated to have reduced the tax burden by 0.7% of GDP.
But the overall forecast is still expected to rise every year and hit a post-war record, driven by the freeze in income tax thresholds and strong earnings growth, the OBR said.
