The headliner for this budget was the 2p cut in National Insurance Contributions, however this is less generous than it might appear.
Income tax and national insurance thresholds remain frozen until 2028
For some the personal tax allowance being frozen, combined with fiscal drag caused by inflation, will offset the cuts to National Insurance Contributions. This is because more income will be subject to income tax, with more people paying tax and more people falling into higher tax bands.
The National Insurance cut was to employee contributions only, which many businesses will find disappointing.
The main rate of Class 1 employee NICs will reduce from 10% to 8% from 6 April 2024, and the main rate of Class 4 self-employed NICs from 6 April 2024 to 6% from 9%.
High Income Child Benefit Charge
The income threshold will increase from £50,000 to £60,000 from 6 April 2024, with the taper being extended to £80,000.
This means that you won’t have to pay any of your Child Benefit back until you start earning £60,000 a year, and you’ll only lose the benefit entirely if you earn above £80,000.
Value Added Tax (VAT)
The VAT threshold will increase to £90,000 from 1 April 2024, and the level at which a business can apply for de-registration will increase from £83,000 up to £88,000
National Living Wage
The National Living wage from April 2024 will have the following changes:
Minimum wage will be:
£11.44 per hour for adults aged 21 and over (up from £10.42 per hour, for those aged 23 and over, and up from £10.18 for 21-to-22-year-olds)
£8.60 per hour for 18-to-20-year-olds (up from £7.49)
£6.40 per hour for under 18s and apprentices (up from £5.28)
