What’s the NI cut really worth?
Headline figure. The big news in the Budget was another reduction (following that in January 2024) in the NI rate for employees; but sadly nothing for employers. For paydays on or after 6 April 2024, most employees will pay 8% instead of 10% NI on their “band earnings”.
What’s it worth? As an employee you’ll only benefit from the NI reduction where your earnings exceed the primary earnings threshold (PET) in a pay period in 2024/25. That’s £242 if you’re weekly paid, £1,048 if you’re paid monthly and if you’re a director or paid annually it’s £12,570 for the year. What’s more, it only applies to earnings up to the upper earnings limit, i.e. £967 per week, £4,189 per month and £50,270 per year. This means for every £1,000 of earnings the NI saving is £20. Self-employed individuals and business partners also see a 2% drop on their profits from 8% to 6%, and they save an additional £3.45 per week as Class 2 contributions become fully voluntary from 6 April 2024.
Tip. You can help your employees know how much better off they’ll be due to the NI rate change by providing a copy of our NI calculator (see The next step ).
To download our calculator, visit https://www.tips-and-advice.co.uk , Download Zone, year 24 issue 12.
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