Autumn Statement 2023: Key Payroll Industry Takeaways

Dec, 2023

In this blog post, we provide an overview of the key payroll-related announcements and updates from the 2023 Autumn Budget. Let’s dive into the crucial details that payroll professionals should be aware of.

National Insurance (NI) Changes:

The government has outlined several changes to National Insurance. Employee NI rates will see a reduction from 12% to 10% from 6th January 2024. Class 2 National Insurance contributions for the self-employed will be abolished, and class 4 NICs will decrease from 9% to 8%.

NI Changes Breakdown:

  • Class 1 employee NICs reduced to 10% from 6th January 2024.
  • Lower Earnings Limit (LEL) frozen at 2023/2024 levels at £6,396 per annum, supporting low-income individuals.

Self-Employed NI Changes:

  • Class 2 NICs abolished from 6th April 2024.
  • Class 4 NICs reduced to 8% from 6th April 2024.

This table provides a breakdown of the adjustments:

NICs Primary Threshold / Lower Profits Limit£12,570 (annual)
Class 1 NICs (from 6 January 2024)10%
Class 4 NICs8%
Lower Earnings Limit£6,396 (annual)
Small Profits Threshold£6,725 (annual)
Class 2 Rate (for those paying voluntarily)£3.45 (per week)
Class 3 Rate£17.45 (per week)

Blended NIC rate for directors and annual maximum calculations

Effective from 6th January 2024, there will be a reduction in the Class 1 primary rate for directors in the 2023/2024 tax year. The annual blended rate for directors will be adjusted to 11.5%.

Where directors are operating alternate directors’ national insurance, the introduction of the blended rate may cause an adjustment of contributions in month 12 or week 52, as part of the annual re-calculation. Those operating directors’ national insurance rules will see any adjustments take place in their next pay period following the rate introduction.

National Minimum and Living Wage Rates:

The government has accepted the Low Pay Commission’s recommendations for National Living Wage (NLW) and National Minimum Wage (NMW) rates, effective from pay periods beginning on or after 1st April 2024. The NLW for those aged 21 and over will increase to £11.44, marking a 9.8% rise.

The rates which will apply from 1st April 2024 are as follows:

NMW rate from 1st April 2024Value increasePercentage increase
National Living Wage (21 and over)£11.44£1.029.8%
18-20 Year Old Rate£8.60£1.1114.8%
16-17 Year Old Rate£6.40£1.1221.2%
Apprentice Rate£6.40£1.1221.2%
Accommodation Offset£9.99£0.899.8%

Pension Updates:

The government reiterates its commitment to the triple lock, resulting in an 8.5% increase in the state pension in April 2024. There will be also be a call for evidence on a lifetime provider model, allowing individuals to consolidate pensions when changing employers.

Employer NICs Reliefs Extensions:

Several extensions to existing employer NICs reliefs have been announced:

  • Employers of veterans will enjoy NIC relief for the first year of employment.
  • Investment zone employers will benefit from an extended program with doubled funding and tax reliefs.
  • Freeport tax reliefs will continue until September 2031, providing zero-rate secondary class 1 NICs for eligible employees.

Uplift in Benefits:

The government will increase all working age benefits by the September 2023 CPI inflation rate of 6.7%. This includes Universal Credit and other benefits delivered by the Department for Work and Pensions. The blind person’s allowance (BPA) and the married couple’s allowance (MCA) will be uprated by the same CPI rate.

For additional details on the announcements made during the Autumn Statement 2023, please visit GOV.UK.