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National Insurance contributions (NICs) to be cut

As expected, Mr Hunt’s main announcement surrounded NICs. In line with prior media reports,
he went even further than the changes he made on NICs in the Autumn Statement last November.

He announced a 2p cut in NICs. From April 6 employee NICS will be cut from 10% to 8%. Meanwhile, self-employed NICS will go from 8% to 6%.

Mr Hunt said: “It means an additional £450 a year for the average employee or £350 for someone self-employed. When combined with the autumn reductions,
it means 27 million employees will get an average tax cut of £900 a year and 2 million self-employed will get a tax cut averaging £650.”

The move is estimated to be worth over £10 billion a year for workers across the UK. Combined with the abolition of the requirement to pay Class 2 NICs,
an average self-employed person on £28,000 will save £650 a year from April 6, the Treasury estimated.

Mr Hunt had already announced a reduction in employees’ National Insurance (NI) by two percentage points from 12% to 10% (for Primary Class 1 contributions)
in November – a change affecting an estimated 27 million people.