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what we expect it to be. On this occasion, it was, and Hunt confirmed the main rate of employee NI would be dropped from 10p to 8p from 6 April 2024. Yes, in the space of less than a month. This follows the previous reduction to NI, from 12p to 10p, which was announced in the autumn statement 2023 and introduced from 6 January 2024. Software developers will now be extremely busy with getting the changes for the new tax year implemented in time. As will payroll professionals, who will be required to test those changes in systems, checking they work correctly to ensure they meet their key remit of paying people accurately and on time. It was of note that when CIPP employees attended the HMRC Stakeholder Conference (see the May issue of Professional for coverage of that event), Jim Harra, HMRC’s chief executive and first permanent secretary, thanked payroll software developers and employers for implementing short notice changes to NI in January 2024. It seems the payroll industry is being pushed to introduce significant changes in short periods of time, which then have subsequent impacts on the pay workers receive. Hunt’s long-term ambition, as he spoke of ‘double taxation’, appears to be the complete abolition of NI. But that’s another story for another day, and for now, let’s just deal with the changes we know are definitely happening. Tax administration and maintenance day (TAMD) In the budget’s accompanying documents, it was confirmed that a TAMD will be held on 18 April 2024. On this date, we can expect a flurry of new consultations and calls for evidence to be published. Some of those will inevitably impact our professions, and there will be proposals around tackling the tax gap and on simplifying and modernising the tax system that we should look out for. As always, the CIPP will be representing the views and opinions of our members and the wider payroll community within our responses, so be sure to keep a look out for any opportunities to get involved and to have your say. Investment zones / freeports The chancellor provided an update on investment zones. This is relevant
as there’s the possibility of applying a zero-secondary rate of employer NI contributions (NICs) for eligible employees’ earnings over the secondary threshold (£9,100 per annum) up to and including the investment zone upper secondary threshold (IZUST) (£25,000 per annum), where the conditions to claim the relief are met. The balance of earnings over the IZUST will be charged at 13.8%. Note that the calculation of primary class 1 NICs is unaffected. In the autumn statement 2023, the chancellor revealed that freeport tax reliefs will be extended from five to ten years for English zones. In the spring budget, he confirmed that the extension will also apply to Scottish green freeports and Welsh freeports, up until September 2034. Details on the Northern Ireland enhanced investment zone will be made available shortly. “It seems the payroll industry is being pushed to introduce significant changes in short periods of time, which then have subsequent impacts on the pay workers receive” HM Revenue and Customs (HMRC) news There were several news snippets which related to HMRC, in terms of where investment will be made to improve services and processes. They included: l £140 million will be invested by the government in improving HMRC’s ability to manage tax debts, to help support individual and business taxpayers out of debt more quickly and to collect due taxes l HMRC’s digital services will be simplified, and will support self-assessment taxpayers by introducing a time to pay arrangement from September 2025 l a new consultation will be published which will further explore options of strengthening the regulatory framework in the tax advice market, and the requirement of tax advisers to register with HMRC when they need to liaise with them on behalf of a client / clients. There’s also an intention
to make it quicker and easier for tax agents to register with HMRC.
Other interesting announcements While not a new announcement, within his speech, the chancellor touched upon the important topics of the future of pensions ‘small pots’ and the plans for employee ‘pots for life’. Current plans involve establishing a system where small pension pots of under £1,000 which are inactive for over 12 months are automatically consolidated, with the aim of achieving better pensions adequacy for savers as their savings aren’t eroded by fees. There are also plans to allow workers to nominate a pension scheme to pay all future automatic enrolment contributions into, to tackle the growing problem of small pots. While not explicitly payroll, this is an area many will have an interest in, and I know payroll professionals often get asked about wider tax affairs. It’s been confirmed that the high-income child benefit charge (HICBC) threshold will be increased from April 2024, from £50,000 to £60,000, with the top end of the taper being increased from £60,000 to £80,000. The HICBC is a tax charge for recipients of child benefit payments, or their partners, on higher incomes. It previously applied where the recipient or their partner had an adjusted net income of £50,000 or more. The government’s long-term aim is to move the system on to a household income test (rather than an individual income test) for eligibility, but this will take time to achieve as HMRC will require additional information. The intention, therefore, is for this to be introduced from April 2026. A parting thought As I said, not huge amounts for our industries to consider, but there seems to be plenty of change coming in the near future, and as always, we should be prepared. The latest announcement regarding the extremely rapid introduction of another adjustment to the main employee’s rate of NI shows us that more and more, we’re being expected to handle significant changes in much shorter time frames. The CIPP will be bringing you further updates and analysis over the coming weeks and months. In the meantime, our full budget summary can be found here: https://ow.ly/ZYVG50QNnn8. n
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| Professional in Payroll, Pensions and Reward |
Issue 99 | April 2024
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