Prime Minister wrong to say ‘everyone in work’ will receive £900 tax cut

This week we're cutting taxes by £900 for everyone in work.

At Prime Minister’s Questions (PMQs) on 1 May 2024, the Prime Minister Rishi Sunak claimed “this week we’re cutting taxes by £900 for everyone in work”. 

But this isn’t correct.

Mr Sunak appeared to be referring to the impact of the most recent reduction in National Insurance contributions (NICs), from 10% to 8%, which was introduced on 6 April 2024. Some workers will have seen the impact of this in their April payslips. 

National Insurance rates had already been reduced in January 2024, from 12% to 10%. 

Each of these two percentage point reductions was worth savings of around £450 for a worker on the average salary (about £35,000). 

According to the Treasury, £900 is the combined impact of both these NIC reductions—but only for “the average employee on £35,400 in 2024-25”, not “everyone in work” as Mr Sunak said during PMQs. 

While a worker on the average salary will see their NIC payments reduced by £900 in 2024/25, Mr Sunak’s claim is missing further context, as it doesn’t take into account the impact of other tax changes, such as ongoing freezes to the thresholds at which NI and income tax are paid. 

The Institute for Fiscal Studies (IFS) says that once the impact of all tax changes are taken into account, the average worker will be about £340 better off in 2024/25, but those earning below £26,000 will be worse off. 

According to the IFS, any worker earning between £26,000 and £60,000 a year (around half of all employees) will be better off, but “any other employees earning enough to pay NICs or income tax will be worse off”. 

We’ve written about similar claims before. 

Ministers should correct false or misleading claims made in Parliament as soon as possible in keeping with the Ministerial Code, which states that they should correct “any inadvertent error at the earliest opportunity”.

Image courtesy of Chris McAndrew.