Payroll Updates
In this ‘Insight’ we take a look at changes to the National Living Wage and National Insurance that come into effect in 2024.
Are you getting National Living Wage payments right?
Recently, the Government named and shamed 524 businesses for failing to pay the minimum wage to their staff.
These failures amounted to a total of nearly £16 million that had not been paid to their workers. Each of the employers named has had to repay their staff for the shortfall and have also faced financial penalties of up to 200% of their underpayment.
The list includes businesses of all sizes, including some major high street brands. For instance, Estée Lauder, easyJet, Greggs, Moss Bros, Currys, and NHS Highland all appear on the list.
It is clear that the Government will take enforcement action against employers that do not pay their staff correctly. Since it can be easy to unintentionally underpay a worker, such as when they hit 18 or 21 when there is a mandatory increase, it is a good idea to regularly review your payment rates.
This is especially important as we come to the start of a new tax year on 6th April as the rates of pay are increasing as set out in the table below.
2023/24 Rate | 2024/25 Rate | |
---|---|---|
National Living Wage 21 and over (previously 23 and over) | £10.42 | £11.44 |
18 to 20 | £7.49 | £8.60 |
Under 18 | £5.28 | £6.40 |
Apprentice | £5.28 | £6.40 |
Accommodation Offset | £9.10 | £9.99 |
To find out more on the Government’s website CLICK HERE
If you need any help with your payroll or reviewing whether your wage payments are correct please feel free to contact us we would be happy to help you! Call our Payroll team on 01384 376 964.
Cuts to National Insurance: Reminders about changes
In November 2023’s Autumn Statement, the Government announced some National Insurance (NI) changes. Some of these changes went into effect in January 2024, whereas others will come into effect on 6th April 2024. Here is a reminder of the changes.
Cut to the main rate of Class 1 employee NI contributions from 12% to 10%
This reduction received the most headlines. This change went into effect from 6th January 2024, and you have likely already made this adjustment.
In some cases, employers were not able to make the change in time due to software not being ready. If that is the case for you then an incorrect amount of NI will have been deducted from your employees and this will need correcting. CLICK HERE for details on how to do so. Please feel free to contact us on 01384 376 964 if you need any help.
HM Revenue and Customs (HMRC) have recently confirmed that the 2% cut also applies to the married woman’s reduced rate of NI contributions, where the rate has dropped from 5.85% to 3.85%. The married woman’s reduced rate of NI contributions applies to married women who opted in before the scheme ended in April 1977.
Cut to the main rate of Class 4 self-employed NI contributions from 9% to 8%
Class 4 NI applies to the taxable profits of a self-employed business. It is calculated when your self-assessment tax return is prepared and collected as part of your income tax bill.
This cut comes into effect for profits earned from 6th April 2024 onwards. There is nothing you need to do to benefit from this cut, it will be automatically applied when your tax bill is calculated.
Removal of liability to pay Class 2 self-employed NI
Sometimes known as the self-employed ‘stamp’, Class 2 NI has been a feature for self-employed taxpayers for many years. It is quoted by HMRC as a weekly rate (£3.45 per week for the 2023/24 tax year) and is usually collected as part of your self-assessment tax bill.
From 6th April 2024 the liability to pay this has been removed. For 2024/25, if your trade profits are above £6,725, you will accrue entitlement to state benefits without paying Class 2 NICs so the charge effectively becomes £nil. However, if your trade profits are below £6,725 and you wish to continue accruing entitlement to state benefits, you’ll need to pay class 2 NICs on a voluntary basis.
If you have any concerns or questions about the NI you are paying, please contact us, we will be happy to help you!
Folkes Worton LLP Chartered Accountants
Accounting for the Future