Jeremy Hunt is set to cut national insurance by a further two percentage points in the budget tomorrow, Sky News understands.
This cut follows a similar reduction in the levy announced at last year’s autumn statement, and comes as the Conservative government looks to set the fiscal stage for the election set to take place in the next 12 months.
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Cutting national insurance is cheaper than changing income tax, as fewer people pay it.
But it also means that those who don’t pay NI won’t see a benefit, including the key Conservative demographic of pensioners.
The cut announced last year – which came into force this year – saved the averaged salaried worker on £35,400 a total of £450 a year according to the government.
However, the Institute for Fiscal Studies thinktank calculates that only those on higher salaries will see a benefit from a national insurance cut.
This is due to the freezing of income tax bands – known as fiscal drag – where salaries rise, but the threshold for higher taxes don’t, so people pay more in income tax.
The IFS say only those earning between £40,000 and £53,000 gain more from a cut to national insurance than they lose to frozen tax bands.
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