The autumn budget which was announced by the chancellor, Jeremy Hunt on Wednesday the 22nd of November has brought welcome news for both those in work and those who are either relying on universal credit because they are not currently working or those who have their income topped up by universal credit.
For those in work, from the beginning of January 2024, you will see a reduction in national insurance contributions which is currently set at 12% but is being reduced to 10%. So by the time you see your wage slip at the end of January, this should already be in place. National insurance is paid . An example of the savings that will be made because of this change is if we take a salary of £25,000 per annum. From this, you should be paying an annual amount of N.I. contributions of £1,491.60 which will decrease in January to £1,243.00 giving you a significant saving of £248.60.
National Insurance contributions are paid if you are aged sixteen and over and are either an employee who earns more than £242 per week in a job or self-employed with a profit of more than £12,570 per year. National Insurance is divided into classes which depend on your employment status and your earnings. National Insurance is currently charged at the 12% if you earn between £12,571 up to £50,271 and 2% on anything above that. If you are self-employed, earning over £12, 570 per annum, then the Class 2 National Insurance contributions will be abolished altogether from next April while for those whose profits are between that amount and £50,270 then the Class 4 contributions will decrease from 9% to 8%. All of these figures can become confusing but you can obtain information from the government website and there are many financial calculators and apps available which can give you specific advice and guidance regarding your finances.
As from next April, those receiving universal credit will see an increase of 6.7% and those who receive disability benefits will also receive that same rate of increased payments. It is worth noting that if you have any disability or health condition that affects your day to day life and you are still working, then you should apply for disability benefits - usually personal independence payments. However much you earn and whatever savings you may have will not affect how much of the benefit you receive so it can really make a big difference to your monthly finances. It is paid monthly straight into your bank account.
For renters, local housing allowance is to be increased to 30% of local rents and the national living wage is also set to increase by 9.8% to £11.44 for those aged 21 and over, £8.60 for those aged between 18 and 20, under 18’s will receive £6.40 and apprentices will receive £6.40 if under 18 or aged 19 and in their first year.
For those reaching pensionable age, the new state pension will receive a significant boost of an 8.5% increase, jumping to £11, 501.22 per annum.
Despite the numerous financial increases, the cost of living crisis is still very apparent and the Office for Budget Responsibility predicting that overall living standards are set to fall even further, meaning we all must remain rather cautious for the foreseeable future.