Yesterday, the government announced that National Insurance contribution rates will be cut by 1.25 percent for employees, employers and self-employed individuals.

The cut will come into effect from the 6th November 2022.

This reverses the increase in National Insurance contributions which was announced earlier this year in April 2022.

According to GOV.UK, this means that, on average, almost 28 million people will save £330 of their money next year. 

Also, it is expected that next year, 929,000 businesses will save around £10,000 as a result.

“Taxing our way to prosperity has never worked. To raise living standards for all, we need to be unapologetic about growing our economy,” says Chancellor of the Exchequer, Kwasi Kwarteng.

 

Health and Social Care Levy

The government also announced the cancellation of the Health and Social Care Levy as a separate tax.

According to HM Revenue & Customs (HMRC)  the “ring-fenced Health and Social Care Levy of 1.25 percent due to be introduced from April 2023 will also not go ahead.”

 

What do these changes mean for employers?

HMRC has stated that:

“We have previously asked employers and software developers to include a temporary generic message on payslips for the tax year (2022 to 2023) to explain the reason for the NICs uplift. This message will not be applicable from 6‌‌‌‌‌‌ ‌‌November 2022, and it should be removed from payslips with effect from this date.

“The full detail on all of these changes will be published by HMRC on GOV‌‌‌‌‌‌‌.UK in due course, but we wanted to email you as soon as possible, so that you can make the appropriate changes in order to be ready for November 2022 payroll. Please be assured that if you use HMRC Basic PAYE tools this software will be automatically updated to take account of these changes.

“We realise the timeline for this is tight and some employers may not be able to implement the changes in time. HMRC will be directing employees to their employers to correct any overpaid NICs in the first instance.

“We have also written to Payroll Software Developers to make them aware of these changes and asked them to take the relevant actions. You should therefore contact your software developer initially with any queries.

“Please note that these changes are subject to Parliamentary approval.

“We have previously asked employers and software developers to include a temporary generic message on payslips for the tax year (2022 to 2023) to explain the reason for the NICs uplift. This message will not be applicable from 6‌‌‌‌‌‌ ‌‌November 2022, and it should be removed from payslips with effect from this date.”

 

 

 

 

 

Amelia Brand
Amelia Brand

Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.