Rishi Sunak has raised the National Insurance threshold by £3000 to lift low earners out paying the 1.25 per cent increase in contributions
The Tory chancellor also promised to cut basic income tax in England by 1p in 2024 to match the current Scottish starter rate for low earners.
Sunak, who had been under huge pressure to acknowledge the rising cost of living, reacted by equalising the NIC threshold with income tax rates.
He said the change would mean that earnings up to £12,570 a year would not be liable “for a single penny of income tax”.
The Chancellor said the move was a £6 billion tax cut for 13 million people, averaging a tax cut of £330 a year for workers.
Sunak claimed the move was “the single biggest tax cut for a decade” and added that 70 per cent of workers will have their taxes cut by more than they pay for the new levy.
National Insurance rates are a reserved power for the UK government but income tax rates are devolved to Holyrood.
Sunak promised there would be tax cuts in the rest of the UK before the next election as he claimed by 2024 inflation would be back under control and growth back on track.
Sunak said: “I can confirm that before the end of this parliament, for the first time in 16 years, the basic rate of income tax will be cut from 20 to 19p in the pound.”
The starter rate for income tax in Scotland, which is set by the Holyrood parliament, is already at 19p with higher earners paying slightly more than those in the rest of the UK.
The Treasury stated: "The Scottish Government’s funding is automatically increased as a result of this tax cut in order to benefit people in Scotland.
"This is initially worth £350 million in 2024-25."
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