March 6, 2024. The Chancellor Jeremy Hunt announced that changes to National Insurance announced in the budget will come into effect from 6 April 2024
ICB will be providing full coverage of the 06 March 2024 UK budget including an indepth budget report and a webinar with tax expert Amy Chin on Tuesday 12 March. However, one announcement requires urgent action of which bookkeepers need to be made aware.
National Insurance contributions are set to change from 06 April 2024 and the main rates of Class 1 Primary (employee) National Insurance Contributions will reduce from 10% to 8%. The reduced rate lowers from 3.85% to 1.85%.
This impacts:
- All employees on category letters A, F, H, M, V, B and I
- All employee earnings between the Primary Threshold and the Upper Earnings Limit
For the tax year 2024/25 (for payments made on and after 06 April 2024), National Insurance percentages will be as follows:
|
Band
|
Standard
|
Pensioners
|
Reduced
|
Deferred
|
|
Table Letters
|
A / F / H / M and V
|
C / S
|
B / I
|
J / L and Z
|
|
Earnings up to LEL
|
NIL
|
NIL
|
NIL
|
NIL
|
|
Earnings between LEL and PT
|
0%
|
NIL
|
0%
|
0%
|
|
Earnings between PT and UEL
|
8%
|
NIL
|
1.85%
|
2%
|
|
Earnings above UEL
|
2%
|
NIL
|
2%
|
2%
|
There is no reduction in the main percentage that applies to employers.
For Bookkeepers
We are one month away from the start of the new tax year and bookkeepers may soon start processing payrolls for Week 1 and Month 1. ICB recommends that members contact their software providers to enquire when they will be updating their software.
If your software provider is unable to implement the changes for the first time you pay employees in 2024/25, note that HMRC will be directing employees to their employers to correct any overpaid NICs in the first instance.
ICB Members can register to attend our dedicated webinar around the budget on Tuesday 12 March here.
