Overview

This bill aims to reduce National Insurance contribution rates for both employees (Class 1) and self-employed individuals (Class 4) in the UK, taking effect from April 6th, 2024. It amends existing legislation to lower the percentage rates and annual maximum contributions.

Description

The bill makes several key changes to the rates of National Insurance Contributions (NICs):

• Class 1 (Employees): The main primary rate will be reduced from 10% to 8%. The reduced rate for lower earners will fall from 3.85% to 1.85%.
• Class 4 (Self-Employed): The main rate will decrease from 9% to 6%.
• Annual Maximum Contributions: The bill adjusts the calculation of annual maximum contributions for both Class 1 and Class 4, reflecting the lowered percentage rates. It replaces previous legislation (from the National Insurance Contributions (Reduction in Rates) Act 2023) concerning both rates and annual maximum contributions.

The changes will be implemented on April 6th, 2024, and the act will be cited as the National Insurance Contributions (Reduction in Rates) Act 2024.

Government Spending

The bill is expected to reduce government revenue from National Insurance contributions. Precise figures on the overall impact on government spending are not provided in the bill text itself.

Groups Affected

The bill will affect:

• Employees: Most employees will benefit from lower NIC deductions from their earnings.
• Self-employed individuals: Self-employed individuals will pay less in Class 4 NICs.
• Government: The government's revenue from NICs will decrease.

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