The HMRC Software Developer Support Team have issued the following to developers in relation to the 2 percentage point cut to the main primary National Insurance contribution rates:
On 6 March 2024, the Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, made his Spring Budget announcements. The Government has announced changes to National Insurance contributions (NICs) rates for the 2024-25 tax year. Please note that this update is subject to Parliamentary approval.
The changes that impact payroll software are:
- A change to the main rate of Primary (Employee) Class 1 NICs for earnings paid on or after 6 April 2024
- No change to Secondary (Employers) Class 1 NICs.
- No change to Class 1A NICs.
We realise the timeline for this is tight and it is possible that some employers will not be able to deduct the correct NICs rates from 6 April. HMRC will be directing employees to their employers to correct any overpaid NICs in the first instance.
Please find attached an updated EB5 document showing the NICs calculations to apply from 6 April 2024, along with a table showing the revised Class 1 rates and thresholds, and updated payroll test data example.
The updated EB5 (NI Guidance for Software Developers) and updated payroll helpbooks will be published on GOV.UK in due course.
Commentary
National Insurance appears to be the change item of choice by the HM Treasury with a hint in direction to eventually remove what the term the double employment taxation.
Some employers may well have already completed their first payroll preparations for payment from 6th April and payroll software, with little to no advance warning, will now require change and testing.
If delivered on-time, then all well and good, else there may be some adjustments across the early tax periods to bring all into align.
HMRC provided documents and data examples:
PAYadvice.UK 6/3/2024 updated with downloads