National Insurance slashed from 12% to 10% to help 27 million – see how you are affected | Personal Finance | Finance

Jeremy Hunt has announced cuts to employee National Insurance from 12 percent to 10 percent.

The cut will be introduced from January 6, 2024 and save millions of people around £450 a year.

Jeremy Hunt told the Commons he would bring forward urgent legislation to Parliament to introduce the cut in national insurance for employees “from January 6, so that people can see the benefit in their payslips at the start of the new year”.

He added: “It means someone on the average salary of £35,000 will save over £450.

“For the average nurse, it is a saving of over £520 and for the typical police officer it is a saving of over £630 every single year.”

The Chancellor told MPs this change would “help 27 million” by putting extra money in their payslips.

The OBR states these lower taxes mean more people will be in work.

These measures will lead to around 94,000 full-time employees in the economy.

Mr Hunt added: “We have delivered the largest ever cut to employee and self-employed National Insurance and the biggest package of tax cuts to be implemented since the 1980s.”

The Chancellor announced the abolition of Class 2 National Insurance payments for two million self-employed people.

In today’s Autumn Statement, Mr Hunt said the reform would save self-employed earners £192 a year on average.

The tax cut will come in on January 6 next year and will see a two percentage point decrease in National Insurance.

This will affect income between @12,570 and £50,270, which will be reduced to 10 percent.

This means those on an average salary of £35,000 will be saving more than £450 a year.

However, shadow chancellor Rachel Reeves says that cut will not offset earlier rises.

The Labour frontbencher said prior tax increases under the Tory government and failure to update tax bands meant there has been an effective 10 percent hike in National Insurance.

Shona Lowe, Financial Planning Expert at abrdn, reacts to the Chancellor’s Autumn Statement said: “The Chancellor’s last-minute decision to cut national insurance by two percent won’t be a ‘cure-all’ for the pressure on households’ finances, but it will put some more in people’s pockets each month. Bringing this into effect in January rather than April will be particularly welcome.

“Millions are still in recovery mode from the enduring cost-of-living crisis, and any measures that relieve the strain and could have a positive impact on the ability of people to save for the future can only be seen as a good thing.

“One key takeaway is the continuing importance of making the money you have work as hard as it can for you. That means making best possible use of current reliefs and allowances to be as tax efficient as you can.”

“The NI changes announced today will no doubt raise questions and there is often hidden complexity with such a change. These are uncertain and constantly changing times, and one of the big advantages of speaking to a financial adviser is that, on top of expert practical advice, they’re able to help you understand what new announcements, like tax alterations, might mean for your personal finances.”