NIC Increase Removed

by | Nov 8, 2022 | Payroll

What does the reversal of the National Insurance increase mean for your business?

It was announced last month, that the 1.25 percentage point rise in National Insurance which has been in place since April 2022, will be reversed from 6 November.
Following the increase in April, the reversal is intended cut the tax burden, promote economic growth and help to raise living standards.

But in practical terms what does it mean for your payroll and your business?

The changes have particular relevance to many small and medium businesses (SMEs), who will see a cut to their National Insurance bills. The changes represent an average of £4,200 next year for small businesses, and £21,700 for medium sized firms who pay National Insurance.

 

When are the National Insurance changes happening?

The Government has pledged to implement the changes as soon as possible to maximise the cash benefit for both individuals and businesses which means that most employees will see a reduction to their National Insurance contributions in their November pay.
However, depending on the complexity of a business’ payroll software and whether they can make the required changes before 6 November, employees may not see the reduction until December or January. Those individuals will receive the benefit retrospectively once the payroll updates have been applied.

 

What action do I need to take with my payroll?

At present, the 1.25% NIC increase must be detailed separately on payslips. In most cases, the payroll software will adjust the National Insurance levels automatically and apply these in November.
Your payroll team will need to remove the additional item from payslips from 6 November.

 

Payroll Support

If the upcoming changes to contributions have an impact on you or your business, or you need support with your payroll, please do not hesitate to get in touch with us.

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