National Insurance cut by 2% for 27,000,000 people in autumn statement

Jeremy Hunt has announced national insurance will be cut for 27 million people, and businesses will receive permanent tax cuts.

In his autumn statement, the chancellor announced the headline rates of national insurance for both employees and self-employed will be reduced.

He declared the economy was ‘back on track’ after inflation fell to its lowest rate of 4.6% in two years.

Follow our live blog for latest updates on the Autumn Statement – and what it means for you

‘Urgent’ legislation will be used to introduce the national insurance cut
from January 6, Jeremy Hunt said.

Some two million self-employed people will benefit from the axing of class 2
national insurance and a cut to class 4 national insurance to 8%, saving them
around £350 a year, Chancellor Jeremy Hunt said.

Class 4 national insurance will also be cut from 9% to 8% for the self-employed.

Mr Hunt said he decided to place cutting national insurance at the forefront of his autumn budget because it affects working people.

Prior to today’s statement, employees earning more than £12,750 annually pay 12% national insurance, while self-employed pay 9%.

A cut of 2% costs around £10 billion, and will be worth roughly £760 a year to workers earning more than £50,000.

Sarah Singleton, from Lincolnshire, is a direct seller for Usborne Books and also does ad-hoc marking for exam boards.

The 44-year-old, who is married with two children aged seven and 10, says the decision to cut national insurance from 12% to 10% is a step in the right direction.

She will save around £140 to £200 a year. But she says it isn’t enough for her family to keep on top of rising prices.

‘Our fixed rate mortgage is due to end in a few months, and I am preparing for that to significantly impact our finances. Cuts to national insurance just won’t alleviate the pressure I am going to face when I come to remortgage, and to combat the rising prices I face across the board,’ she said.

‘I suspect the changes announced today will go unnoticed in the grand scheme of things, which is one of the reasons that I have taken financial matters into my own hands and created multiple streams of income.

‘On average I make about £1,600 a month through Usborne and also do some ad hoc work with exam boards to earn extra money to help with the cost of living. It’s this type of additional income I need, not small changes such as those announced today.’

Plans to reduce income tax were considered, but these are now more likely to be unveiled in the spring budget, The Times reports.

The ‘full expensing’ scheme for businesses introduced in March will become
permanent, the Chancellor confirmed, calling it the ‘largest business tax cut
in modern British history’.

This allows companies to deduct spending on investment from profits, meaning paying less in corporation tax.

Mr Hunt called it one of the largest tax cuts for businesses in modern British history.

But think tank Resolution Foundation said people will pay more national insurance overall because the threshold at which they pay it has been frozen.

This has been described as a ‘stealth tax’ because choosing not to raise thresholds in line with inflation means the government takes more of people’s income.

But the governor of the Bank of England told MPs ‘too much weight’ is being put on the recent fall in inflation, saying he remained ‘concerned about the potential persistence of inflation’.

Mr Sunak signalled on Monday the fall in inflation meant the government felt able to reduce taxes.

But he stressed the need to cut taxes in a ‘serious, responsible way, based on fiscal rules to deliver sound money’.

Jeremy Hunt said he hoped the autumn statement’s measures would make a ‘really big difference’ to entrepreneurs.

In a social media video, the Chancellor said the statement had ‘110 different measures to help grow the British economy’.

‘I’m thinking of my own business, that I set up over 30 years ago,’ the Chancellor said.

‘I want to help thousands of other people do what I did, and I hope today will make a really big difference.’

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