The Chancellor cut NI before in his Autumn Statement with the new rate taking effect from 6 January.

The NI cut announced today will put more money into the salaries of employees who pay NI.

Taking 2p off Class 1 NI will add:

• £309 to the pay-packet of a median (£28,000) salary earner

• £488.60 for a worker earning £35,000

• £549 to an individual earning £40,000

• For those on more than £50,270 annually an income rise of £754

Lindsay James, investment strategist at Quilter Investors, said: “While this cut would be welcome news to hard-pressed taxpayers, in the context of frozen tax thresholds and other planned tax rises in the years ahead in areas such as stamp duty land tax, the tax burden is still on track to exceed all-time highs. Meanwhile, public services continue to be a source of frustration for much of the electorate.”

Sarah Coles, head of personal finance at Hargreaves Lansdown, said the NI cut would be unpopular with investors and pensioners.

She said: “Unfortunately, there’s no relief for those past state pension age – who don’t pay National Insurance - or those earning income from investments. It’s one reason why it makes sense to consider using your ISA allowances where you can, so you’re not relying on the generosity of a Chancellor with each passing Budget.

“But National Insurance is only one part of a wider tax picture, which is growing gloomier. This April we’ll see another freeze in the personal allowance and the higher rate tax threshold, which the OBR says will see 1.1 million more people dragged into paying income tax and 800,000 more forced to pay higher rate tax.

“It means we can’t look at a National Insurance saving in isolation. We’re still locked into a freeze that means over time we’re going to see our tax bills continue to rise. And because more of the benefit of cuts goes to higher earners, those on lower earnings will suffer particularly. When you factor in both the National Insurance cut and the tax threshold freezes, those earning less than £19,000 will actually be worse off.”

In another tax move, Chancellor Jeremy Hunt has announced a 4% drop in the higher rate of Property Capital Gains Tax to 24%.

Chancellor Hunt said the move is predicted to increase revenues as there will be more property transactions as a result.