The headline news from the Spring Budget was further cuts to national insurance contributions (NIC) of 2% each for self-employed taxpayers and employees.
The main rate of primary Class 1 NIC paid by employees on earnings between £12,570 and £50,270 per year will be cut from 10% to 8% from 6 April 2024. Combined with the 2% cut announced in the Autumn Statement 2023, this will save the average worker earning £35,400 over £900 a year.
Self-employed taxpayers will receive a further 2% reduction in Class 4 self-employed NIC, on top of the 1% cut announced at Autumn Statement 2023. This means that from 6 April 2024 the main rate of Class 4 NIC for the self-employed will now be reduced from 9% to 6%. Combined with the abolition of the requirement to pay Class 2, this will save an average self-employed person earning £28,000 around £650 a year.
As announced in the Autumn Statement, self-employed traders with profits above £12,570 will no longer pay Class 2 NIC but will continue to receive access to contributory benefits including the state pension. Those with profits between £6,725 and £12,570 will continue on this basis. Those with profits under £6,725 who choose to pay Class 2 NIC voluntarily to protect their entitlement to contributory benefits including the state pension will continue to be able to do so.
The rates for the 2024-25 tax year are as follows:
| Employee and employer rates |
Employee (Class 1 primary) |
Employer (Class 1 secondary) |
||
| Earnings per week |
Threshold |
2024-25 |
Threshold |
2024-25 |
| Below primary threshold / secondary threshold £242 |
£12,570 |
Nil |
£9,100 |
Nil |
| Above primary threshold/ secondary threshold £242 |
8% |
13.8% |
||
| Below upper secondary threshold for under 21s, apprentices under 25 and armed forces veterans £967 |
0% |
|||
| Above upper earnings limit £967 |
£50,270 |
2% |
n/a |
13.8% |
| Self-employed rates |
Class 2 (per week) |
Class 4 |
||
| Profits per year |
Limit |
2024-25 |
Limit |
2024-25 |
| Below small profits threshold |
£6,725 |
Voluntary |
– |
– |
| Above small profits threshold to lower profits limit |
Abolished |
– |
– |
|
| Lower profits limit to upper profits limit |
£12,570 |
6% |
||
| Above upper profits limit |
£50,270 |
2% |
||
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