A cut to National Insurance is expected to be announced in today’s Autumn Statement in a huge boost for 28 million people.
Chancellor Jeremy Hunt is set to reduce headline rates of National Insurance, as well as make permanent a £10 billion-a-year tax break for companies that invest in equipment and technology, according to reports.
The Treasury has already signalled a series of measures will feature in the speech, including tax breaks after Prime Minister Rishi Sunak met his goal of halving inflation this year.
Read more: Millions to get extra £1,800 into bank accounts in major pay boost
After inflation fell to 4.6% in October, the government can now work on reducing the tax burden. It is likely that measures will include tax breaks for business investment, but Sunak has also said he wants to “reward hard work”, which hints that reductions to income tax or National Insurance could be on the cards.
You pay mandatory National Insurance if you are aged 16 or over and are either employed and earning more than £242 per week, or self-employed and making a profit of more than £12,570 per year. You must also pay National Insurance contributions to qualify for certain benefits and the State Pension.
Hunt’s deputy Treasury Chief Secretary Laura Trott has already indicated that people will benefit from a giveaway in the form of either income tax or National Insurance reductions, with the Chancellor due to insist his plan can deliver growth for the country and cut the national debt.
Asked about recent frequent changes to National Insurance, Trott told Times Radio: “We were in a very, very difficult spot a year ago. The Prime Minister and Chancellor had to make some extremely difficult decisions, decisions which no government, I think, would want to take, no Conservative government certainly would want to take.
“But we have turned a corner. Inflation has halved. That is really significant for people at home. We know how tough things have been. Real wages are, for three months, now ahead of inflation – again, that’s really important to kind of making a difference to how people feel.
“So we can now talk about tax cuts and focus on growth, and that is what we’re going to be doing.”
Trott added that the decision to freeze tax thresholds, which has pushed some people into higher tax bands, was “really difficult”.
Hunt’s Commons statement on Wednesday is expected to contain 110 different growth measures in a bid to revive the UK’s economy and the Tories’ election chances.
He will tell MPs: “After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track. We have supported families with rising bills, cut borrowing and halved inflation. The economy has grown. Real incomes have risen. Our plan for the British economy is working. But the work is not done.
“Conservatives know that a dynamic economy depends less on the decisions and diktats of ministers than on the energy and enterprise of the British people.”
Today’s Autumn Statement announcement comes after the government confirmed a major boost to the National Living Wage on Tuesday, with the rate set to rise from £10.42 to £11.44 from April. The rate will also be extended to cover workers aged 21 and over, rather than 23 and over, for the first time.
It means that almost three million workers will get an annual pay rise of £1,800 next year, while 18 to 20-year-olds will receive a £1.11 hourly rise to £8.60.
A stricter approach to welfare is also expected with plans to get people off benefits and into jobs, meaning those with mental health or mobility problems could be told to search for jobs that are possible to do from home.
Additionally, free prescriptions and legal aid will be cut off for benefits claimants who are deemed fit to work but don’t look for employment, the government announced last week.
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