United Kingdom

Individual - Significant developments

Last reviewed - 12 February 2024

National insurance contributions (NICs) rates and thresholds

On 22 November 2023, the Chancellor of the Exchequer announced the following changes to NICs.

  • For the 2023/24 tax year, employees currently pay Class 1 NICs at 12% on earnings between 12,571 and 50,270 pounds sterling (GBP) and 2% on any earnings above that. Employers also currently pay Class 1 NICs at 13.8% on their employees’ earnings above GBP 9,100.  
  • On 22 November 2023, the Chancellor announced that the main rate of employee Class 1 NICs will be cut by 2% from 12% to 10% with effect from 6 January 2024.
  • Self-employed individuals pay Class 2 and Class 4 NICs. Currently, Class 2 NIC is a flat rate of GBP 3.45 per week where profits are above GBP 12,570 and Class 4 NIC is at 9% for profits between GBP 12,570 and GBP 50,270 and 2% on any profits above that. 
  • On 22 November 2023, the Chancellor announced that compulsory Class 2 NIC will be abolished from April 2024. Access to entitlements and credits will be maintained in full. Those who want to contribute voluntarily can still do so. 
  • Class 4 NIC will be cut by 1% from 9% to 8% from April 2024.

Basis period reform

The United Kingdom (UK) government has brought in significant changes to the way self-employed individuals are taxed on trading profits. The changes are called ’basis period reform‘. The new measures do not impact the UK taxation of non-trading income or capital gains. For further details, see ‘Basis period reform’ in the Other issues section.