Millions of workers to get £900 pay boost from tomorrow as new tax year begins
Millions of workers could save around £900 a year if they are making £35,400 or more
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Millions of workers will see a cut in their National Insurance rate from tomorrow, which could help ease some financial strain on household budgets.
Employees will see the main rate of National Insurance cut from 10 per cent to eight per cent from tomorrow, April 6.
Millions of workers could save around £900 a year if they are making £35,400 or more, the Government has said.
Those who are self-employed also stand to make savings as the main rate of Class 4 NI contributions will be reduced.
The reduction is expected to save a self-employed worker earning £28,000 about £650 a year.
The main rate will be reduced to six per cent.
The main rate of National Insurance will be cut from 10 per cent to eight per cent from April 6.
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Around two million self-employed workers and 27 million employed workers will benefit from the National Insurance cuts – 29 million workers will see less of their money going to National Insurance from tomorrow.
The tax cuts will cost the Government £20billion a year but will mean that workers on the average salary of £35,000 will pay less in personal taxes than any other country in the G7.
The Treasury has explained that these tax cuts have only been possible as the UK economy is “turning a corner”.
A spokesperson for HM Treasury said: "These cuts are possible because the economy is turning a corner, thanks to the government’s decisive action to bring inflation down from 11.1 per cent to 3.4 per cent and ensure borrowing costs start to fall.
“Because of this progress, the government can now cut taxes to reward work and grow the economy.”
Chancellor Jeremy Hunt said: "The record tax cuts taking effect...show our economic plan is working – because of the progress we’ve made we’re putting hundreds of pounds a year back into the pockets of working people across the country.
“It shows we stand behind those who work hard and fires the starting gun on our long-term ambition to end the unfair double tax on work.”
By cutting National Insurance, the Government aims to grow the British economy by bringing more people into the labour market.
The Office for Budget Responsibility (OBR) expects that, as a result of these combined cuts, total hours worked will increase by the equivalent of almost 200,000 full-time workers by 2028-29.
Although millions of people will be able to make savings, the frozen income tax bands could cancel out any savings.
With the personal allowance set at £12,570 until 2028, any pay increases could push people into paying more tax.
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Rachel Reeves, Labour’s Shadow Chancellor, said: “Every time Rishi Sunak goes on the television claiming he is cutting taxes, he is insulting the intelligence of hard-working families.”She accused the Government of “giving with one hand and taking with another”.
However Mr Hunt said the cuts show “we stand behind those who work hard and fires the starting gun on our long-term ambition to end the unfair double tax on work”.
Prime Minister Rishi Sunak said: “Hard work is one of my core values, and the progress we have made on the economy means we can reward work with a tax cut worth £900 for the average earner.
“This marks the next step in our plan to end the unfairness of double taxation of work by abolishing national insurance in the long term.”