The National Insurance Contributions (Reduction in Rates) (No 2) Bill is expected to be rushed through Parliament to give effect to the NICs rate cuts announced at Spring Budget 2024. All remaining stages in the House of Commons were scheduled to be completed on 13 March 2024.
Once enacted, the NICs (Reduction in Rates) Act 2024 will make the following changes with effect from 6 April 2024:
reduce the main Class 1 primary rate of NICs to 8%; and
reduce the main Class 4 rate to 6% (overriding the previously expected reduction to 8%).
As a consequence of the principal changes, the special primary Class 1 rate for married women with valid certificates of election is reduced accordingly to 1.85%.
The percentages for the annual maxima calculations are also revised.
Even though proceedings are being taken quickly, with royal assent expected before the Parliamentary Easter recess (starting on 26 March), payroll software providers will still be expected to update their systems in a short window to avoid Class 1 overpayments going through after 6 April (HMRC accordingly updated its NICs guidance for software developers on 11 March).
Having surveyed its members following the Autumn Statement 2023 cut to employee NICs (which had effect from 6 January 2024) the Chartered Institute of Payroll Professionals (CIPP) reported that 98% of the 700 respondents to its survey had implemented those changes in time, with potential backdating of any overpaid NICs considered to be ‘a significant burden on payroll departments’ and ‘not an option’.
The National Insurance Contributions (Reduction in Rates) (No 2) Bill is expected to be rushed through Parliament to give effect to the NICs rate cuts announced at Spring Budget 2024. All remaining stages in the House of Commons were scheduled to be completed on 13 March 2024.
Once enacted, the NICs (Reduction in Rates) Act 2024 will make the following changes with effect from 6 April 2024:
reduce the main Class 1 primary rate of NICs to 8%; and
reduce the main Class 4 rate to 6% (overriding the previously expected reduction to 8%).
As a consequence of the principal changes, the special primary Class 1 rate for married women with valid certificates of election is reduced accordingly to 1.85%.
The percentages for the annual maxima calculations are also revised.
Even though proceedings are being taken quickly, with royal assent expected before the Parliamentary Easter recess (starting on 26 March), payroll software providers will still be expected to update their systems in a short window to avoid Class 1 overpayments going through after 6 April (HMRC accordingly updated its NICs guidance for software developers on 11 March).
Having surveyed its members following the Autumn Statement 2023 cut to employee NICs (which had effect from 6 January 2024) the Chartered Institute of Payroll Professionals (CIPP) reported that 98% of the 700 respondents to its survey had implemented those changes in time, with potential backdating of any overpaid NICs considered to be ‘a significant burden on payroll departments’ and ‘not an option’.
