National Insurance changes coming into effect from 6th January

Effective 6th January, 2024, the primary rate of class 1 employee National Insurance Contributions (NICs) will undergo a reduction to 10%, constituting a 2-percentage point decrease in this mid-tax year adjustment. Employees whose employers or payroll service providers have implemented the changes to their payroll system will benefit from the lowered NI rate starting January.

For those employers and service providers unable to update their payroll systems in time for the January modifications, the overpayment of NI can be rectified by reimbursing employees in subsequent months.

Here are some essential considerations:

  • Ensure that your software is up to date and conduct test runs to confirm the successful implementation of changes.

  • If using HM Revenue and Customs (HMRC's) Basic PAYE Tools, make sure you are using the latest release.

  • Directors who departed within the 2023/24 tax year will require a recalculation of their NICs, factoring in the blended rate of class 1 NICs.

  • Directors who remain employed and have their NICs computed using the alternative method should transition to the cumulative calculation in their final pay period of the tax year to ensure NICs are calculated using the blended rate.

Source: Gov.uk

National Insurance Reduction
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