Today the government announced an in-year reduction to National Insurance rates starting from the 6th November 2022 and the cancellation of the Health & Social Care Levy as a separate tax due to be brought in on the 6th April 2023.
This is overall good news for employers and employees that are all finding the cost of living rises a challenge, every little helps!
Employees on a net pay agreement however will not benefit from these changes as the benefit will go entirely to the employer, reducing their overall employment costs.
The key changes are: –
- National Insurance contribution (NIC) rates will be cut by 1.25 percentage points for employees, employers and the self-employed, effectively reversing the uplift introduced in April 2022 for the rest of the tax year. This cut will take effect from 6 November 2022 and it will cover Class 1 (both employee and employer), Class 1A , Class 1B and Class 4 (self-employed) NICs
- the ring-fenced Health and Social Care Levy of 1.25% due to be introduced from April 2023 will also not go ahead
The voluntary temporary payslip message that HMRC requested employers and software developers to include throughout 2022-23 to explain about the NICs uplift will be removed from the 6th November 2022.
The timeline is tight for software developers to make the necessary changes. However, we have every faith in our software suppliers to be able to make the changes in time. If this has not possible for any reason, any overpaid NICs will be corrected in a future pay period in the 2022-23 tax year.
The full detail on all of these changes will be published by HMRC on GOV.UK in due course.