Prime Minister Announces National Insurance Increase

How will your team manage this change?

As we celebrated National Payroll Week 2021, the Prime Minister announced an increase to National Insurance rates in 2022/23 for one tax year as part of the ‘Build Back Better: Our Plan for Health and Social Care’. After this, from 2023/24 it will become a separate Levy. As payrollers, this means we will need to ensure the Levy is visible as a separate line on each employee payslip to show the exact additional amount each employee is paying. Is your software or service provider preparing for this?

The aim of the plan is to tackle the backlog the NHS are facing due to the pandemic and put the NHS on a sustainable footing. The plan includes details of the social care costs cap and how financial assistance will work for those without substantial assets. Information on the plan can be found here: https://www.gov.uk/government/publications/build-back-better-our-plan-for-health-and-social-care

As a provider of payroll software and services to UK businesses, PayEscape are getting prepared for the next two years of changes ahead. We have put together points to consider that will help you prepare for the upcoming changes.

In the next two years you need to consider:

• How will your payroll provider handle these changes?

• How will the update to payslips look to employees?

• Are your employees aware of this change?

• The Levy will apply to income Class 1 (Employee, Employer) and Class 4 (Self-Employed, including partners) National Insurance, and from 2023 onwards, the Levy will also apply to those above State Pension age who are still in employment

• The increase will not apply to class 2 NICs or Class 3 NICs

• Existing NICS reliefs to support employers will apply to the Levy

A fundamental aspect of the change is going to be the impact it has on employees’ wages. It is always good to communicate to employees any legislation changes that could impact their pay to avoid queries that will come through payroll and increase your already heavy workload. At Payescape, we are preparing to make changes in readiness for 2022 and 2023, and we are here to support you with any advice and understanding of the new NI changes. We can support communicating this change to your employees to manage expectations as well.

Talk to our team to get started on adjusting your payroll to accommodate the new changes. We can help ensure a seamless transition and compliance with new regulations. Click here to get started