The income tax Personal Allowance rose with Consumer Price Index inflation as planned to £12,570 in April 2021. At Autumn Statement 2022, the Chancellor announced that the personal tax thresholds would be frozen for a further two years until April 2028 to ensure sound money in the face of global headwinds. Even after this freeze, we will still have the most generous set of tax-free allowances of any G7 country.
I welcome the Chancellor's 2023 Autumn Statement, which includes the biggest package of tax cuts to be implemented at a fiscal event since the 1980s, all while getting borrowing lower and inflation falling. The main rate of Class 1 employee National Insurance contributions (NICs) has been cut from 12 per cent to 10 per cent from 6 January, meaning the average worker on £35,400 will receive a tax cut in 2024-25 of over £450.
The Government is also cutting taxes for the self-employed from 6 April 2024. It will reduce the main rate of Class 4 self-employed NICs from 9 per cent to 8 per cent and abolish the outdated and needlessly complex Class 2 self-employed NICs, reforming and simplifying the tax system. Taken together, these changes will benefit around 2 million self-employed individuals and result in an average self-employed person on £28,200 saving £350 in 2024-25.
Any decision to modify our tax regime is a matter for the Treasury and careful consideration will be given to any proposed amendments to current income tax thresholds.
12/02/2024