National Insurance Contributions Cut
On 22 November the Chancellor presented his latest Autumn Statement. You can read our summary here.
Within the Statement he announced that National Insurance Contributions (NICs) would be either reduced or cut altogether (depending on the type of contribution class). You can see an overview of the changes below.
As well as being aware of the changes to the various rates, it’s important to point out the dates these changes come into effect, as they’re not all the same. The changes to the Class 2 and Class 4 NICs will be brought in at the start of the new tax year, on 6th April 2024. The change to the Class 1 NICs however have been rushed through the House of Commons to take effect from 6th January 2024.
If you have employees, it’s important you’re therefore ready to implement the new rate with effect from the new year.
Class 1 Employee NICs
The main rate of Class 1 employee NICs will be reduced for employees from 12% to 10% from 6 January 2024. This will apply to earnings between £12,570 and £50,270 per annum.
Class 2 NICs
Class 2 NICs, paid at a flat rate of £3.45 a week by the self-employed with profits above £12,570 will be abolished from 6 April 2024.
Class 4 NICs
The rate of Class 4 NICs, paid by the self-employed on earnings between £12,570 and £50,270 will be reduced from 9% to 8% from 6 April 2024.
What if my profits are below £12,570?
Those with profits between £6,725 and £12,570 will continue to access benefits through a National Insurance credit without paying NICs as they do currently.
Will there be any impact on benefits?
No, as above, access to contributory benefits, including the State Pension will be maintained as they are now.
Summary
These reductions are obviously good news as it means we all get to keep a little more in our pockets. The important element is making sure we make the necessary adjustments to our figures and with effect from the correct date.
If you have any questions or would like any help, please get in touch. We’d love to hear from you.
