Chancellor Jeremy Hunt is expected to announce a 2p cut in National Insurance (NI) in the Budget today (6 March).
In Last November’s Autumn Statement, the government cut the starter rate of NI from 12% to 10%. This is the rate charged on earnings between £12,570 and £50,270.
A cut of 2p, combined with this previous cut, would be a considerable boost to workers, as NI isn’t paid by those over the state pension age.
According to Evelyn Partners, those earning £20,000 would save £149 a year; those earning £30,000 would save £349 a year; and those earning £40,000 would save £549 a year.
Higher and additional rate taxpayers, meanwhile, would save £754 a year.
As previously announced, self-employed people are also due a cut in NI, which comes into force in April.
The cut would cost the Treasury approximately £10bn a year, which could be funded by a range of tax increases, such as on vapes and fossil-fuel producers, and changes to the tax status of ‘non-doms’.
AJ Bell director of personal finance, Laura Suter, said: “The move will also help to quell some of the claims of generational unfairness, as those on the state pension are likely to be handed another meaty increase through the triple-lock.
“As Jeremy Hunt has already made cuts to NI, he could point to the overall tax saving for individuals from the combined cuts – offering up a juicier headline to win over voters.”
In a video released by the Treasury, Jeremy Hunt said: “Great budgets make history. The bit of history I want to change is to show people it is possible through all the ups and downs, through all the challenges, to have healthy growth, good public services and to bring down taxes.”
However, Lindsay James, investment strategist at Quilter Investors, said: “While this cut would be welcome news to hard-pressed taxpayers, in the context of frozen tax thresholds and other planned tax rises in the years ahead in areas such as stamp duty land tax, the tax burden is still on track to exceed all-time highs. Meanwhile, public services continue to be a source of frustration for much of the electorate.”
Comments