The 12% to 10% employees national insurance rate cut first announced in the Autumn Statement came into effect in January. This means that many employees will have seen a boost in their take home pay in their January pay packet.
HM Revenue and Customs launched a tool (https://www.tax.service.gov.uk/estimate-jan-24-nic-changes) that enabled workers to estimate how the changes will affect them.
The government is naturally keen to emphasise its generosity in this measure and have claimed that a household with two average earners will be starting to see a yearly benefit from the cut of almost £1,000. Naturally, how much benefit earners actually receive will depend on how near the average their earnings are.
The rate reduction only applies to employees’ national insurance, and not employers’ national insurance. This means there is no direct saving for businesses. However, with many businesses under stress to grant pay rises that will combat the increasing cost of living, the reduction may prove to be a helpful component of pay strategy.
See: https://www.gov.uk/government/publications/changes-to-national-insurance-contributions-from-6-january-2024
New data from the Office for National Statistics suggests that UK businesses are continuing to slow down recruitment, with job vacancies falling by 63,000 between March and May.
Last week, the Chancellor unveiled her Spending Review setting out how government departments will allocate money over the coming years. While much of the focus was on large-scale public services like the NHS and schools, there are some important signals here for businesses to take note of - both in terms of opportunity and outlook.