New law from today will see millions of people have hundreds of pounds extra a year

Millions of workers all across the country will have hundreds of pounds extra in their pockets following a major change today (January 6).

The main rate of national insurance will be slashed from 12 per cent to 10 per cent. Chancellor Jeremy Hunt announced the change in last year's autumn statement where ministers have since claimed it will save the average worker £450.

The chancellor also claimed the cut would save families with two earners nearly £1,000 in the following tax year. Prime Minister Rishi Sunak, said he intends to keep cutting people's taxes.

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The Chancellor said: “Today’s cut in national insurance by 2% means that a typical family with two earners will be nearly a thousand pounds better off this year. That is really important in a cost-of-living crisis where people have been feeling real pressure on family budgets, but also it rewards work, it’ll bring more people into the labour force and that is good for growing the economy.”

He added: “It’s the start of a process, as Chancellor if I can afford to go further I will, I don’t yet know if I can.

“But we want to do this because it helps families, it also helps to grow the economy, and we believe that a lightly taxed economy will grow faster and in the end that’ll mean more money for public services like the NHS.”

Adam Corlett, principal economist at the think tank, said cutting national insurance was a “smarter choice than the options of cutting income tax or inheritance tax”.

“But for many, particularly those earning less than £26,000, the tax cut today will be offset by the tax rise that is effectively coming in April, when personal tax thresholds are frozen again.”

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