![]() Author's calculations., Author provided (no reuse) How the cut in national insurance contributions (NICs) might affect you. ![]() How the national insurance cut might affect you: This amounts to a substantial rise in income tax, estimated to rake in an extra £35 billion a year for the government by 2028-29. ![]() The higher your top rate of tax (your marginal rate), the less you get to keep of every extra pound you earn. But the freeze causes what’s known as “fiscal drag”, meaning that as your earnings rise, you get drawn into higher tax bands. Normally these levels would rise each year with inflation. However, the national insurance cut (which will cost the government £10.1 billion in the coming year) only partially offsets the impact of the ongoing freeze in the income tax personal allowance and higher rate band until April 2028. The government also announced a long-term, but undated, ambition to abolish national insurance altogether. It comes hard on the heels of a similar cut in January this year. The big attention-grabber in the budget was a two percentage point cut in national insurance contributions for employees and the self-employed from April. Jonquil Lowe, Senior Lecturer in Economics and Personal Finance, The Open University Would he or wouldn’t he cut income tax? (He wouldn’t.) Would he pull rabbits out of hats in a bid to convince the electorate that the Conservatives should stay in power? Here’s what our panel of experts made of his plans: National insurance cut only partially offsets rising tax burden The spring budget of 2024 was widely seen as a chance for UK chancellor Jeremy Hunt to inject some economic optimism into British politics ahead of a general election. Lancaster University, University of Sheffield, and The Open University provide funding as founding partners of The Conversation UK.īrunel University London, University of York, University of Bath, and University of East London provide funding as members of The Conversation UK. Jonquil Lowe is a member of the Policy Advisory Group of the Women's Budget Group ( ).Īlper Kara, Hilary Ingham, and Shampa Roy-Mukherjee do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment. All dividends received are donated to health-related charities, and proceeds from any future share sale or takeover will be similarly donated.Īndrew Burlinson currently receives funding from UKERC (UKRI) and previously received relevant funding from EPSRC. The shares were a gift from a public health campaigner and are not held for financial gain or benefit. ![]() He also owns ten shares in Imperial Brands for research purposes. Rob Branston is a non-active member of the Liberal Democrats and receives funding from Bloomberg Philanthropies as part of the Bloomberg Initiative to Reduce Tobacco use. Vice Dean and Associate Professor in Economics, University of East London Reader in Health Economics, Centre for Health Economics, University of York Senior Lecturer in Economics and Personal Finance, The Open University Professor of Economics, Lancaster University Lecturer in Economics, University of Sheffield Professor of Banking and Finance, Brunel University London Senior Lecturer (Associate Professor) in Business Economics, University of Bath
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