Autumn Statement 2023 and what it means for National Insurance

Welcome but puzzling National Insurance changes

The National Insurance (NI) cuts gave the employed a better deal, than the entrepreneurial self-employed.

The reductions in NI rates are broadly welcome. They will put more money in the pockets of employees and the self-employed. However, this is only returning to individuals some of the extra tax they have had to pay due to fiscal drag. The government has frozen tax rate bands and annual allowances until 2027/28 and there was no announcement in today’s Autumn Statement to change or address that.

Crucially too, the employer rate of NI is not being reduced and will stay at 13.8%. Without any corresponding cut in employer NI, employers will continue to bear this ‘people cost’ at the same level. This is at the same time as many employers in sectors such as retail and manufacturing will see their people costs increase due to the uplift in the hourly rates of the National Living Wage and National Minimum Wage.

It is also puzzling that for the entrepreneurial self-employed, the NI rate was only cut by 1% not by 2% as it was for employees. The self-employed have been handed an extra tax cut in that Class 2 NI has been abolished but that only gives them back £3.45 a week.