What You Need to Know:
– Around 27 million workers in the UK will benefit from a significant tax cut starting next week.
– The two percentage point cut to the main rate of National Insurance Contributions (NICs) will result in an average annual pay rise of £450 for employees.
– The average worker earning £35,000 a year will save over £450.
How You're Affected:
– Depending on your role and income, you could see up to £600 more in your pocket each year thanks to the tax cut.
– For example, a senior nurse with five years of experience earning £42,618 will receive an annual gain of £600.
– Even a cleaner working night shifts on £21,000 will receive a gain of £170.
Self-Employed Workers Benefit Too:
– The self-employed will also receive an income boost of up to £350 due to the abolition of certain NICs.
– From April, the rate charged for Class 4 NICs will be cut by one percentage point, saving two million self-employed workers £350 a year.
– Additionally, from April 2024, Class 2 National Insurance will be abolished, saving the average self-employed person £192 a year.
Understanding National Insurance:
– National Insurance is a tax on your earnings that goes towards state benefits such as the state pension and maternity leave.
– You pay National Insurance if you're 16 or over and earn above £242 a week as an employee or make a profit of £6,725 or more a year as a self-employed individual.
– The current NIC thresholds are £12,570 a year for employed workers and £6,725 for self-employed individuals.
– Rates for National Insurance Contributions range from 12% to 2%, depending on your earnings.
Key Takeaways:
– Starting next week, millions of workers in the UK will experience a £450 income boost due to a tax cut on National Insurance Contributions.
– The self-employed will also benefit, with an income boost of up to £350 thanks to the abolition of certain NICs.
– It's important to understand National Insurance and how it affects your earnings based on your employment status and income level.
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