As Economic Secretary to the Treasury, many aspects of my brief deal with complex areas of our economy, like financial services regulation, insurance, and pension funds. However, my role also means that I'm part of the broader team at HM Treasury, helping to shape the UK's long-term economic agenda, alongside the Chancellor of the Exchequer. That means contributing to the Government's major fiscal events, like the budget and the Autumn statement, while supporting the Government's overall economic agenda.
As announced in the Autumn Statement, the main rate of National Insurance for employees has now been reduced from 12% to 10%. This change took effect towards the end of last week, on January 6th, meaning that the new rate of NI will apply for the financial year 2024-25. Cutting the main rate of National Insurance for employees will amount to a tax cut worth £625 for the average full time employee in Hitchin, Harpenden and the villages in 2024-25. Across the country it means that a typical family with two earners will save almost a thousand pounds a year on their tax bills, making it that bit easier to afford the essentials, or save up for long-term plans.
About 2 million self-employed people will also benefit from a tax cut. If you are self-employed and your profits are £12,570 or more a year, you will typically pay “class 2” and “class 4” National Insurance. From 6 April this year, the Government is reducing the main rate of class 4 self-employed National Insurance – paid on profits between £12,570 and £50,270 – from 9% to 8%. We are also abolishing class 2 self-employed National Insurance, which currently stand at £3.45 a week. Taken together, these changes will result in an average self-employed person earning £28,200 a year saving £350 in 2024-25. A typical self-employed plumber on £34,400 will be £410 better off as a result of these cuts.
Putting more money into the pockets of ordinary working people is something that I feel passionately about - I am a firm believer in the idea that you know best how to spend your money. I know that this is a philosophy shared by the Chancellor, and by the Prime Minister, both of whom recognise the importance, both practically and philosophically, of allowing people to keep more of the money that they earn. As we move into a new year, I am excited by this Government's direction, and proud to be contributing to the Treasury's efforts to get our economy growing faster, while putting more money in the pockets of ordinary working families and making the UK one of the most attractive places in the world to do business. Onwards and upwards - here's to 2024.
