How much will the 2p National Insurance cut save me?

The government is cutting National Insurance (NI) by another 2p from April. It is not changing income-tax rates but previous changes to the way tax is calculated mean the amount people pay overall is rising. Chancellor Jeremy Hunt announced the starting rate for NI will change from 10% to 8% for 27 million workers from 6 April 2024. NI rates apply across the UK.

You start paying NI when you turn 16 and earn over £242 a week. It is not paid by people over state pension age, even if they are working. The government uses National Insurance contributions (NICs) to pay for benefits and help fund the NHS. The government records how many years of contributions you have made.

Paying a lower rate of NI does not mean you contribute fewer. Eligibility for some benefits, including the state pension, depends on the NI contributions you make across your working life. You can also make voluntary contributions to plug gaps in your record. NI threshold and tax-free personal allowance frozen at £12,570 until 2028.

Higher-rate tax will continue to kick in for earnings above £50,270. Freezing the thresholds means that more people start paying tax and NI as their wages increase. It will create 3. 2 million extra taxpayers by 2028, and 2.

6 million more people will pay higher rates. Income tax is paid on earnings from employment and profits from self-employment during the tax year, which runs from 6 April to 5 April the following year. But by 2027, the average earner would be only £140 better off - and only people earning between £32,000 and £55,000 a year would be better off. For most families, income tax is the single biggest tax they pay.

But for less well-off households, a greater share of family income goes on taxes on spending, known as indirect taxes. These apply in England, Wales and Northern Ireland. But overall taxation in the UK is high compared with historical rates. The OBR said the government will collect 37.

1p of every pound generated in the economy in 2028/29. That will be the highest level in 80 years. Share your reaction to the Budget and any questions you have by emailing HaveYourSay@bbc. co.

uk.

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