Higher or lower? Contrasting tax claims from Sunak and Reeves

This past weekend saw the government’s changes to National Insurance contributions (NICs) take effect, reducing the main rate of NICs from 12% to 10%.

We’ve looked into some contrasting claims about their impact, made by the Prime Minister, Rishi Sunak, and Labour’s shadow chancellor, Rachel Reeves.

Mr Sunak has claimed that the NICs reduction is worth £450 to the average worker. This is true, but lacks some important context. 

Someone with the average full-time annual earnings will pay around £450 less in NICs this year than if the rate had remained the same. But as the Institute for Fiscal Studies says, when threshold freezes are taken into account, someone on the average salary will save much less, and workers will pay more tax in the long term.

Meanwhile, Ms Reeves claimed that “this year an average working family is going to be paying £1,200 more in tax” as a result of tax changes implemented by the government.

This is not correct, and Labour has confirmed that Ms Reeves ‘misspoke’.

The £1,200 figure refers to an estimate from the Resolution Foundation think tank, which said following the Autumn Statement in November that the combined effect of threshold freezes and cuts to NI would result in ”a net personal tax rise of around £1,200 per household” by 2028/29, not this year, as Ms Reeves claimed.