Single
Low income
2023-24 Luke, 24, works 35 hours a week at a cafe and is paid the minimum wage of £10.42 an hour. This means he receives £365 a week or £18,964 a year. After tax of £1,279 and national insurance contributions (NICs) of £735 – in January the government cut main rate or class 1 contributions paid by employees from 12% to 10% – are deducted he is left with £326 a week or £16,950 a year.
2024-25 The minimum wage rises in April to £11.44. This means his gross income rises to £400 a week or £20,820 a year. His tax bill is now £1,650. The 2p NICS cut announced in the autumn statement was worth £165 to him with the fresh 2p cut in the budget (taking the class 1 rate down to 8%) worth the same again, a total saving of £330. His NICs bill is now £660. He takes home £356 a week or £18,510 net a year so is £1,560 better off than last year.
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Single
Lone parent
2023-24 Bob works 24 hours a week in a shop and is paid the minimum wage, so receives £247 a week or £988 a month. The family live in a private rented flat in the Midlands costing £700 a month. His income is topped up with weekly universal credit payments of £190. He has one child so also receives £24 a week child benefit. He also received cost of living payments totalling £900.
2024-25 The minimum wage rise means Bob’s weekly gross earnings rise to £274.56 a week which gives him a gross income of £14,277. His personal tax-free allowance is £12,570 so he becomes a basic rate taxpayer paying £478 in income tax and NICs over the year. His net pay is £265 a week. His child benefit increases to £25.60 a week and his universal credit to £213 a week because of the 6.7% increase to most benefits. His pay rise and benefits increase mean he has an extra £42.60 a week to cover bills. It is not clear whether cost of living payments will be repeated.
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Single
Average earner
2023-24 Jessica earns the UK’s typical (median) wage of £38,000 in her marketing job and pays £5,086 a year in income tax and national insurance of £2,924. Her monthly take-home pay is £2,499 after tax, or £29,990 a year.
2024-25 Her employer has awarded her a £2,500 pay rise. As a result her tax bill rises by £500 to £5,586, but her NICs fall. The 2p cut already announced was worth £559 with the fresh cut worth the same – a total of £1,118. This year her monthly take-home pay will be £2,723 after tax, or £32,680 a year. She is £224 a month better off.
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Unmarried couple, two children
Both working, the higher earner is self-employed
2023-24 James is a self-employed engineering contractor with taxable profits of £60,000 while Lily earns £25,000 working in a school. Due to the tax charge on higher-earning parents they repay their £2,075 a year child benefit entitlement. Their combined annual income tax and NI bill is £19,114, leaving them with a monthly income of £5,491.
2024-25 James has been unable to up his rates and Lily has not received a pay rise so their income is the same. Last year the government axed class 2 NICs paid by self-employed workers, a saving of £179.40, and now the class 4 rate has been cut from 9% to 6% reducing James’s NICs bill by £1,310 to £2,457. Lily’s NICs cut is £497. The child benefit changes mean the couple no longer have to repay it so in total they are £3,882 a year or £324 a month better off.
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Married couple, two children
One higher income
2023-24 The working parent, Sarah, pays £7,286 income tax and £4,189 in national insurance on earnings of £49,000. This translates into a net annual salary of £37,525. The family receives child benefit which is worth £2,075 a year – giving a total income of £39,599.
2024-25 Sarah has been awarded a £6,000 pay rise so becomes a higher-rate taxpayer for the first time – a victim of fiscal drag. The 4p cut reduces her NICs bill by £1,132. She will not have to pay back any of her child benefit, so she is £4,933 a year or £411 a month better off.
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Rich couple, no kids
Both top earners
2023-24 Out of Fred’s £150,000 annual salary, he pays £53,703 income tax and £6,330 NICs, leaving him with a net £89,967 a year. After deductions, Ryan’s £85,000 is worth £58,538 net. This gives them a combined net income of £148,505 a year.
2024-25 Recession fears mean no pay rises for these high flyers, but the 4p rate cut means both their NICs bill come down by £1,320 and they have £2,640 more to spend on personal training sessions this year.
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Single pensioner
New state pension
2023-24 Mary’s new state pension is worth £203.85 a week, £883 a month or £10,600 a year. She is a homeowner living in Wales in a council tax band D property. Mary qualifies for £26.83 a week council tax reduction and £14.82 a week in pension credit. She also got the £900 worth of annual cost of living payment.
2024-25 Wendy’s new state pension rises to £221.20 a week and her pension credit to £15.79 a week. If her council tax goes up by 5% the reduction will also be adjusted to £28.23 a week. The NI cut doesn’t affect her. Her regular benefits are worth £952 more this year, but she’s only £52 better off if cost of living payments are not repeated.
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Married pensioners
Both receive the new state pension plus one £8,000 private pension and £2,000 share dividend income
2023-24 Once the first state pension is combined with the income from the private one, the holder receives a gross income of £18,600 a year. From this they lose £1,206 to income tax. Small investors used to bank up to £2,000 in dividend payments tax-free but the allowance halved to £1,000 this year so must they hand over £88 (it is charged at 8.75% for basic-rate taxpayers) resulting in a net income of £19,307. The second pension is worth £10,600 a year, giving a combined income of £29,907.
2024-25 The state pension rise of 8.5% is applied and their private pension rises by a similar amount. From this they lose £1,546 to income tax. The share income allowance has halved again, to £500, so they must hand over £131 in tax resulting in a net annual income of £20,624. The increase in the new state pension means their partner’s income has risen to £11,502. Overall they are £2,220 better off this year than last.
Some figures rounded up to the nearest pound, and different rates apply in Scotland.
Tax and national insurance calculations provided by the accountants, Blick Rothenberg.
2023-24 figures include the national insurance cut that came into effect on 6 January 2024
Benefits calculations provided by Entitledto which has a free benefits calculator on its website.
