The National Insurance cuts in the Spring Budget made most of the Budget-related headlines. So, what effect will they have on an Employer?

Your Employees benefit…

In last year’s Autumn Statement, Employee’s National Insurance was cut by 2% from 12% to 10%. This change came into effect on 6^th January 2024.

The Spring Budget extended this further by reducing the Employee National Insurance contribution by a further 2%, bringing the rate down to 8% from 6^th April 2024.

If you were planning to pay staff bonuses in your March payroll, then there may be some mileage in seeing if staff would like these payments deferred to April so that they benefit from the lower National Insurance rate and keep more of the bonus.

Employer’s National Insurance remains unchanged

This reduction only affects the rate of National Insurance paid by Employees. The rate of Employer’s National Insurance remains unchanged at 13.8% for any wages you pay in excess of £9,100 a year (£175 per week). 

There is therefore no immediate financial benefit for an Employer from the cut to the Employee rate.

Payroll Software

As an employer, you will need to be sure that your payroll software is updated for the change in rate prior to 6^thApril 2024. 

It’s likely that most major providers of payroll software will be ready, but it’s a good idea to check this and that you (or your payroll provider) are running the latest version.

Employment Allowance

As has been the case in recent years, eligible employers can still claim an Employment Allowance in 2024/25, worth £5,000 per year as a reduction on the total National Insurance liability. 

Speak to your payroll provider if you’re unsure whether your qualify or are unsure how to claim this.

You can see our Spring Budget Summary here.