Budget 2024: self employed NICs reduced to 6%    

Budget 2024: self employed NICs reduced to 6%    

As part of cuts to national insurance for all workers, the Chancellor cut national insurance for self employed to 6% from April

The government is also cutting a further 2p from the main rate of self-employed National Insurance on top of the 1p cut announced at Autumn Statement 2023.

This means that from 6 April 2024 the main rate of Class 4 NICs 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 on £28,000 around £650 a year.

Unlike the January cut which was delayed for three months, the latest NICs cut will come into force from the new tax year 2024-25.

Rachel McEleney, associate tax director at Deloitte, said: ‘The main rate of national insurance payable by the self-employed for profits between £12,570 and £50,270 will be reduced to 6% from 6 April 2024, a change from the 9% to 8% reduction previously announced in the Autumn Statement.

‘This means that overall, the self-employed will pay up to £1,310.40 less in national insurance in 2024/25 compared to 2023/24.’

Becky Bowness, Armstrong Watson’s head of tax, said: ‘Unsurprisingly, given an impending election, there was a lot of political bluster and not a lot of content in this Budget.

‘We already knew the headline grabber – a 2% cut to national insurance contributions for employees and the self-employed - but that doesn’t help employers, who will be faced with the increase to national minimum wage in April, and it also does little for fiscal drag given there was no change to income tax thresholds.’

Analysis by tax experts at EY has broken down the savings from the cumulative cuts in national insurance rates for the self employed.

 Changes from 6 April 2024

Reduction of main rate of Class 4 NICs from 9% to 8%, and Class 2 NICs abolished, from 6 April 2024

Gross salary £    Annual saving £

20,000                 267

30,000                 367

40,000                 467

50,000                 567

60,000                 569

100,000               569

This article is taken from the following link:

https://www.accountancydaily.co/budget-2024-self-employed-nics-reduced-6