Chancellor announces cut in main National Insurance rates

The Chancellor Jeremy Hunt presented the Autumn Statement to the House of Commons on 22 November 2023, the House of Commons Library reports¹. In his statement he announced a cut in the main rate of National Insurance contributions paid by employees, known as primary Class 1 NICs, and the main rate paid by the self-employed, Class 4 NICs¹. Separate legislation was introduced on 23 November 2023 to give effect to these changes¹.

The rates themselves, and the dates from which they apply, are not set out in the Library briefing. The briefing records only that the cut was announced and that separate legislation followed¹. The Autumn Statement documents published alongside the statement include HMRC's overview of tax legislation and rates, whose Annex A provides tables of tax rates and allowances for 2023/24 and 2024/25¹.

The Finance Bill 2023-24 carried the measures requiring legislation. Following the Chancellor's statement the Government introduced 37 ways and means resolutions covering the measures to be included in the Bill¹. The Commons debated these on 22, 23 and 27 November 2023, and at the end of the debate on 27 November the House voted on them without dividing¹. The Bill was then introduced and received its first reading¹.

Its second reading took place on 13 December 2023 and was agreed to on division, by 291 ayes to 54 noes¹. An amendment moved by the SNP's Drew Hendry to decline the Bill a second reading was negatived by 46 ayes to 296 noes¹. The Committee of the Whole House stage took place on 10 January 2024 and the Public Bill Committee stage on 16 January 2024, after which the Bill finished that stage without amendment¹. It returned to the floor of the House on 5 February 2024 for Report Stage and third reading, where third reading was agreed to by 283 ayes to 39 noes¹. The Bill received Royal Assent on 22 February 2024 and became the Finance Act 2024¹.

Two measures in the Bill attracted most interest, according to the Library: the abolition of the pensions lifetime allowance, on which HMRC published a tax information and impact note explaining the policy from 6 April 2024, and the announcement that capital allowance full expensing would be made permanent¹.

Why it matters for households

The announcement covers the two National Insurance rates that most working people pay: primary Class 1, deducted from employees' pay through PAYE, and Class 4, paid by the self-employed on profits. A cut to either rate reduces the amount deducted or paid over on the same earnings or profits, so the effect shows up in take-home pay for employees and in the tax bill for the self-employed.

The Library briefing does not state the new rates, the size of the cut in percentage points, the date the cut takes effect, or the earnings thresholds to which the rates apply¹. It also does not give the number of people affected or the cost to the Exchequer. Those figures appear in the Autumn Statement documents and in HMRC's rates and allowances tables, but they are not reproduced in the briefing¹.

The cut was announced alongside other tax measures in the same statement, including the abolition of the pensions lifetime allowance and the permanent extension of capital allowance full expensing¹. The lifetime allowance change is covered by an HMRC tax information and impact note describing the policy from 6 April 2024¹.

What happens next

The National Insurance changes were given effect by separate legislation introduced on 23 November 2023, which undertook all its remaining Commons stages on 30 November 2023¹. The wider Finance Bill 2023-24 completed its passage and became the Finance Act 2024 on 22 February 2024¹.