Government's £450-a-year National Insurance claim missing important context

Over the last couple of days, both the Prime Minister Rishi Sunak and the chancellor Jeremy Hunt have said that the average worker will take home £450 more a year as a result of this month’s reduction in the rate of National Insurance—but their claims are missing important context. 

In an article for the website Conservative Home, published this morning, Mr Hunt wrote: “Conservatives cut taxes when we can… The Autumn Statement was the start: two percentage points off employee National Insurance, worth £450 a year to the average worker.” 

In a piece for yesterday’s Sun on Sunday, meanwhile, Mr Sunak said that the National Insurance change means “someone on the average wage will take home £450 more this year”. 

We wrote about this figure earlier this month, when Mr Sunak made a similar claim.

It is true that the reduction will mean someone on £35,000 a year, roughly the average full-time wage, pays £450 less in National Insurance than if the rate had remained the same. But this figure doesn’t factor in the impact of freezes to the personal allowance threshold of income tax and how much someone earns before they begin paying National Insurance contributions. 

According to the Institute for Fiscal Studies (IFS), the average worker will gain about £130 more from the National Insurance cut than they lose from this April’s freeze in thresholds. The IFS also says that frozen thresholds, which are set to stay in place until 2027/28, mean that the average worker will pay around £440 a year more in direct tax by this point.