National Insurance Contribution Rate Update effective of January 2024 in the UK

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The UK government has announced some changes to National Insurance contributions for employees in the recent Autumn Budget in the autumn statement.

  • Class 1 national insurance contributions (NICs) will reduce from 12% to 10%.
  • This gives the average employee on a salary of £35,400 an extra £450 in their pocket.
  • To the average employee on a salary of £35,400, this will be worth £450 saving a year, reducing the current combined tax rate of 32% for employees paying the basic rate of tax to 30%.

Changes to National insurance contributions for employees

  • Starting January 6, 2024, there will be a reduction in the primary rate of Employee’s National Insurance contributions.
  • Before this update, the National Insurance rate for most employees is 12% on income of £1,048 to £4,189 a month.
  • As of January 2024, employees are now required to pay 10% on earnings between £1048 and £4,189 per month and 2% on all earnings above £4,189 per month.
    • This adjustment will result in a higher net salary at the end of each month.
  • The National Insurance rate for those earning above £50,270 a year will remain at 2%.
  • In 2024-2025, this is a tax cut worth £450 for the average employee on £35,400 and means they will pay over 15% less NICs.

What does this change in National Insurance mean for you?

If you are one of the estimated 29 million individuals to benefit from the NI cuts, this means you will keep more of your pay. This will have a wider positive impact for households and families. Also, there will be implications relating to salary sacrifice with a reduction in rate, meaning a reduction in savings.


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