January 6, 2024, 00:18 | Updated: January 6, 2024, 00:41
Millions of Britons are set to benefit from a tax cut starting today.
Image: Alamy
Millions of Britons will start saving on their National Insurance contributions from today following the Chancellor’s planned tax cut.
Counselor Jeremy Hunt He pledged to reduce national insurance contributions in his country Autumn statementalong with more than 100 other measures to help boost the economy before the next general election.
Under this reduction, contributions were reduced by two percentage points, from 12% to 10%.
The average worker earning £35,400 will save £450 a year, and families with two middle incomes will save almost £1,000.
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Treasury Secretary Jeremy Hunt praised the cut, saying the economy had “turned a corner”.
Hunt said: “With inflation halved, we have turned a corner and are cutting taxes – starting with today’s record cut to National Insurance of nearly £1,000 per family.
“From nurses and construction workers to cleaners and butchers, 27 million hardworking Britons will have more money in their pockets.”
Hunt said the reduction was “the beginning of the process”. “If I could go further, I would… I don’t know yet if I can.”
“We want to do this because it helps families, and it also helps grow the economy, and we believe a lightly taxed economy will grow faster, and ultimately that will mean more money for public services like the NHS.”
Under the reduced rates, the average full-time nurse will save £520 a year, while the average junior doctor will save £750 and the average teacher £630.
The Chancellor announced the reduction in the autumn statement.
Image: Alamy
Prime Minister Rishi Sunak said: “We have made difficult decisions on the economy, and supported people through global shocks such as the pandemic and Putin’s illegal invasion of Ukraine. Thanks to the difficult decisions taken by this Government, we are today able to cut taxes for 27 million people across the UK.
“Today’s tax cuts will directly reward hard-working people, putting £450 back into the pocket of the average worker and helping them make ends meet.”
But the cut in National Insurance comes as the government has frozen the income tax threshold, providing a real tax rise for millions.
The Autumn Statement restored just £1 of tax cuts for every £4 of tax rises due to the freeze on thresholds since 2021, the Institute for Fiscal Studies said.
Labor criticized the cut as a “raw deal”.
The party said the freeze on income tax and National Insurance thresholds meant that households had been pulled into higher tax bands, meaning they were no better off under the cut.
Shadow Chancellor Rachel Reeves said: “Under Rishi Sunak’s initial deal, for every extra £10 people pay in tax, they get just £2 back.”
Mr Hunt also said in his autumn statement that he would scrap second-tier National Insurance, which many self-employed people pay, from April, which would save the average self-employed person £192 a year.
This comes after inflation fell significantly to its lowest rate in two years in November – falling from 4.6% to 3.9%.