National Insurance Contributions (Reduction in Rates) Act 2024 receives Royal Assent

The National Insurance Contributions (Reduction in Rates) Act 2024 received Royal Assent on 20 March 2024, becoming chapter 5 of that year¹. The Act reduces the main rate of primary Class 1 National Insurance contributions paid by employees from 10% to 8%, and the main Class 4 rate paid by the self-employed from 9% to 6%¹. All provisions come into force on 6 April 2024¹.

The employee cut is made by substituting "8%" for "10%" in section 8(2)(a) of the Social Security Contributions and Benefits Act 1992 for Great Britain, with equivalent provision for Northern Ireland². The self-employed cut substitutes "6%" for "9 per cent" in section 15(3ZA)(a) of the same Act, again with a Northern Ireland equivalent². The Act also reduces the reduced rate applying to a historic class of married women and widows, from 3.85% to 1.85%¹.

The self-employed change supersedes section 2 of the National Insurance Contributions (Reduction in Rates) Act 2023, which is "to be treated as never having had effect"¹. That earlier Act had legislated a reduction to 8%; the current main Class 4 percentage before this Act was 9%¹. Section 2 of the new Act also amends the calculation of the annual maximum for the start of the 2024-25 tax year in regulations 21 and 100 of the Social Security (Contributions) Regulations 2001, and supersedes paragraph 3 of the Schedule to the 2023 Act¹.

The government's explanatory notes state the Act is intended to provide a further cut in the amount of NICs paid for 29 million working people, worth over £450 to the average employee earning £35,400 per annum and £310 to the average self-employed person with profits of £28,000 per annum¹.

The Act extends to and applies in England, Wales, Scotland and Northern Ireland¹. The explanatory notes state that the matters covered are not within the legislative competence of the Scottish Parliament, Senedd Cymru or the Northern Ireland Assembly, and that no legislative consent motion is being sought¹.

Why it matters for households

Employees paying the main Class 1 rate see the percentage deducted from pay fall from 10% to 8% for the 2024-25 tax year, and self-employed people paying the main Class 4 rate see it fall from 9% to 6%¹. Both changes take effect from 6 April 2024, so they apply to pay and profits from the start of that tax year rather than to earlier income¹. The government's estimate of the effect is over £450 a year for an average employee earning £35,400 and £310 for an average self-employed person with profits of £28,000¹. The married women's and widows' reduced rate also falls, from 3.85% to 1.85%². The Act changes the annual maximum calculation for people with more than one employment and for Class 4 contributions, so those with multiple jobs or sources of self-employed profit are affected by the amended formula as well as the headline rates¹. How the rates apply to different groups is set out in the guide to self-employed and employee National Insurance compared, and the wider system in the tax hub.

What happens next

The Act came into force on 6 April 2024¹. A Tax Information and Impact Note has been published by HM Revenue and Customs alongside the Act¹. No further commencement steps are set out in the legislation, and no later changes to these rates are reported in the Act or its explanatory notes¹.