National Insurance Reduced
New Chancellor Kwasi Kwarteng has announced the first of the announcements that were expected this week, by reducing the rate of National Insurance Contributions.
As widely anticipated, National Insurance contribution (NIC) rates are to be reduced by 1.25% for employees, employers and the self-employed, effectively reversing the increase introduced in April 2022. The reduction will apply for the rest of the tax year.
This cut will take effect from 6th November 2022 and will cover Class 1 (both employee and employer), Class 1A , Class 1B and Class 4 (self-employed) NICs.
The Health and Social Care Levy that was due to take effect from April 2023, at the same 1.25% contribution level, has been cancelled.
Employers had been asked by HMRC to add a message to payslips to explain the reason for the enhanced rate, which can obviously now be removed from payslips from 6th November.
If you use HMRC Basic PAYE tools to calculate your payroll, this will automatically be adjusted to take account of these changes.
If you use a payroll bureau to calculate your payroll, they should automatically make the necessary adjustments, but we’d advise you to check this will be the case as soon as possible.
We’re expecting more details from Mr Kwarteng in the mini-budget and will send our summary to clients as soon as we’re able after he’s spoken. If you’d like to receive your copy, please add your details to the form below, and we’ll do the rest!
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