Dear All,

With the new tax year starting today (6th April), I thought it would be worth summarising the various changes which are happening.

People in Employment

The headline rate of employees’ National Insurance is being cut by another 2% from 10% to 8%. This form of NI is deducted from wages between £12,570 and £50,270 per year so this tax cut will directly benefit anyone earning wages over £12,500 per year, effective from 6th April. This is a tax cut for 27 million working people and is on top of the similar recent 2% cut – meaning the 4% total reduction leaves a worker earning £35,000 an annual £900 better off.  So overall, Employees’ NI has come down from 12% to 8% in a matter of just a few months. Average wages are currently rising by 6.2% and inflation has fallen to 3.4%, meaning wages are rising faster than inflation, which is very welcome.   For those on lower incomes, the minimum wage will increase by a record amount – from £10.42 to £11.44 per hour, an increase of 9.8%, – to make sure that work pays.  This is a pay increase of £1,800 for someone working full time on the minimum wage. The new £11.44 a minimum wage compares to just £5.93 in 2010 (this increase is well above inflation over that period).  Finally, unemployment is now under 4% – less than half the level it was when the last Labour Government left office in 2010.


State Pensions will rise by 8.5% in April, which comes on top of the 10.1% rise last year.  This year’s increase (effective on 8th April) is worth £900 per year. Given that inflation is currently 3.4% (and falling) this year’s 8.5% increase will be welcome.  Pensioners will also continue to be completely exempt from paying any National Insurance at all.

Self Employed people

The main rate of Class 4 National Insurance is being cut further to 6% now (it was 9% as recently as 2023), saving a self-employed person on £28,000 over £650 compared to last year when combined with scrapping the requirement to pay Class 2 National Insurance (as announced at the Autumn Statement).


On child benefit, half a million working families will benefit an average of £1,300 from an increase in the means test threshold from £50,000 to £60,000 – which means that only those earning more than £60,000 (not £50,000 as now) will have child benefit tapered down. The withdrawal rate is also being halved, so child benefit is not withdrawn in full until someone earns over £80,000. From April 2026 the means test will be administered on a household rather than an individual basis, with a consultation in due course.  3 & 4 year olds continue to receive 15-30 hours a week of free child care (depending on circumstances); from this month 2 year olds will receive 15 hours of free child care as well, extending to also cover 9 month to 23 month olds in September this year. From September 2025, every child from 9 months to the start of school will get 30 hours free childcare.

Energy Prices

The energy price cap is coming down by 12.3%, saving an average household £238 per year. This will help everyone.


The VAT registration threshold for small businesses will be increased from £85,000 to £90,000, which has the effect of lifting some smaller companies out of the VAT regime entirely.  This comes on top of full expensing of qualifying capital expenditure announced previously being made permanent – meaning that capital investment can be deducted from profits for tax purposes entirely in the year in which it occurs (rather than it being spread over many years as before).  Retail, hospitality and leisure businesses will get 75% business rates relief for this financial year up to £110,000, meaning smaller shops and most pubs will get the 75% relief on business rates.

People on Benefits

Benefits will increase by 6.7% in April, on top of the 10.1% increase last year. Inflation has fallen to 3.4%, so this is a substantially above-inflation increase. The most vulnerable families will also receive targeted support through a £500 million extension to the Household Support Fund for an extra 6 months to September 2024, helping local authorities to support people with the cost of essentials.

Fuel Duty

The main rates of fuel (i.e. petrol and diesel) duty will be frozen again until March 2025 with the temporary 5p cut also extended, saving car drivers around £50 this year and £250 since the 5p cut was introduced – a £5 billion tax cut.


Inflation has fallen to 3.4% and is forecast to fall to under 2% by the end of the year. Wages, pensions and benefits are all rising much faster than inflation now, which helps everyone. The fall in inflation and forecast further falls mean it is likely that interest rates will also start to fall quite rapidly during the course of this year (although that is of course up to the independent Bank of England).

Public Services

Day-to-day public spending will increase by 1% higher than inflation on average over the next Parliament. On top of record levels of NHS and education spending, a further £4.2 billion is being invested to improve public service productivity through technology, freeing frontline workers to do their job more effectively. The NHS will receive £3.4 billion of this to invest in new technology and digital transformation, including making the NHS app a single front door for patients, piloting new AI to halve form-filling times for doctors, rolling out universal electronic patient records, and over one hundred upgraded AI-fitted scanners so doctors can read MRI scans more accurately and quickly. This will improve patient care and improve efficiency.

This shows, I hope, that the economic outlook is improving and that there is a plan which is working.

I hope this summary of the changes taking place this week is useful.