HOT TOPIC
What the autumn statement means for you – the payroll professionals
Lora Murphy MCIPP, editor, CIPP, provides a summary of everything you, the payroll professionals, need to know from Jeremy Hunt’s autumn statement 2023
T he CIPP’s policy and research team always brace themselves for a fiscal statement day. Sometimes they can be relatively quiet for the payroll industry (and despite not being super busy, we’re secretly really disappointed), and at other times, fiscal statements can bring with them a huge raft of changes and new policies for payroll professionals to be aware of. This year, we certainly heard some news that you’ll want to be aware of. We cover those updates here, in an easy to digest hot topic article for you. On 22 November 2023, Jeremy Hunt, chancellor of the Exchequer, took to the Houses of Parliament to deliver the autumn statement, following a period of political turbulence. We had anticipated big changes to be delivered in the King’s speech, held earlier in the month (7 November), but the news for payroll to be aware of was seemingly saved up until Hunt’s speech. The BIG one: changes to National Insurance (NI) Mr Hunt saved his big announcement until the end of the statement, and this all centred around the topic of NI. There was news for self-employed individuals, as it was confirmed that: l from 6 April 2024, class 2 NICs for the self-employed will be abolished
l there will be a cut to class 4 NICs, which is the main rate of self-employed NI, to also take effect on 6 April 2024, reducing the rate to 8%. Payroll professionals and payroll software developers will have been more interested in the confirmation regarding changes to class 1 NICs paid by employees. The chancellor stated that the main rate of class 1 NI for employees would be reduced by two percentage points, from 12% to 10%. For a brief moment, we assumed this would be implemented from the start of the next tax year, on 6 April 2024, but that would be far too simple, wouldn’t it?! Instead, the legislation is going to be pushed through so that the changes take effect from 6 January 2024 onwards. Software developers, assemble! In recognition of the short lead time in which to get these changes implemented, it was confirmed that any employers or service providers who can’t amend their
payroll system in time for that January date can reimburse any overpayment of NI to employees in subsequent months. This mid tax-year change also has broader implications, so directors will have a blended NI rate for tax year 2023/24, where employers use the standard, cumulative annual method. To see the list of percentages to be applied for the rest of the tax year, please go here: https:// ow.ly/x5s250QaMjE. National minimum wage (NMW) / national living wage (NLW) rates Prior to the autumn statement, the government already confirmed that the NLW would increase to at least £11 for pay periods beginning on or after 1 April 2024. The day before the chancellor’s announcement, we received the news that the NLW would actually increase to £11.44, and we also got clarity on what the other NMW rates will be. As a side note, the NLW will also apply to everyone
“We know we can handle a mid-tax year National Insurance rate change as we’ve done it before, because let’s face it, we’re amazing. But there’s work to be done to facilitate this again”
| Professional in Payroll, Pensions and Reward | December 2023 - January 2024 | Issue 96 56
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