If you’re self employed

The first announcement was that Class 2 National Insurance will be abolished from 6 April 2024 for the self-employed (including partners in a trading partnership and members of an LLP).

This equates to a saving of £179 per annum if annual profits exceed £12,570.

The Chancellor confirmed that credit will continue to be given for State Pension and other benefits for those earning between £6,725 and £12,570, despite the fact they will not have to pay any National Insurance. For those with income of less than £6,275 there will be the option of making voluntary National Insurance contributions to secure State Pension and other benefits.

In addition to the abolition of Class 2, the Chancellor also reduced the rate of Class 4 National Insurance from 9% to 8%. For a taxpayer with profits exceeding £50,270, this will save £377 per year. This change also comes into effect from 6 April 2024.

Overall, someone who is registered as self-employed could be better off by up to £556 per annum.

If you’re employed

The changes to National Insurance did not stop with the self-employed. In a measure that will affect around 27 million people in the UK, there will be a reduction in Class 1 National Insurance, payable on employment income, from 12% to 10%. The Chancellor pointed out that his motivation was to reduce the tax on working people to encourage more people into paid employment.

If an employee is earning £50,270 or more, they will receive an additional £754 in their annual pay packet, or almost £63 per month. This will go some way to softening the blow of fiscal drag, which has pushed significantly more taxpayers into tax and higher rates of tax because of the freeze on tax thresholds.

Unusually, the change to Class 1 will take effect from 6 January 2024 rather than coming into force in April 2024.

If you’re an employer

Finally, no announcements were made in relation to employer’s National Insurance rates.

Our Autumn Statement 2023 question time webinar is now available to watch on-demand. During the webinar, our panel of tax and business experts came together to examine the changes unveiled by the Chancellor, and to answer your questions. Click here to watch the webinar.

Alternatively, if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.