INFO | National Insurance contributions (NICs) and changes to the High Income Child Benefit Charge

The Chancellor of the Exchequer, the Rt Hon Jeremy Hunt MP, and set out the government’s plans to bring forward a series of reforms to ensure the tax system is simple, fair, keeps pace with economic developments, and supports public finances. One of the tax measures relevant to you as an employer was on National Insurance contributions.

The government has announced a cut to the main rate of Class 1 employee NICs from 10% to 8% from 6‌‌‌ ‌‌April 2024. Taxes for the self-employed will also be cut by a further 2 pence on top of the 1 pence cut to 8% announced at Autumn Statement. This means that from April 2024 the main rate of Class 4 NICs for the self-employed will now be reduced from 9% to 6%.

Please take steps now to start work with your payroll software provider, and where applicable IT delivery partners, to get ready to implement the change to Class 1 employee NICs that comes into effect from 6‌‌‌ ‌‌April 2024.

HMRC’s Basic PAYE Tools product will be updated to reflect this latest change.

Another measure the government announced was on the High Income Child Benefit Charge, and an increase to the threshold to £60,000 from 6‌‌‌ ‌‌April 2024, with a taper up to £80,000. The charge will be 1% of the Child Benefit for every £200 of income that exceeds £60,000 and will equal the payment for income that exceeds £80,000.

Your employees may be interested in claiming Child Benefit or restarting Child Benefit payments if they have previously opted out. The charge is tapered, so if they, or their partner, earns between £60,000 and £80,000 it can still be worth their while financially to claim. Claims for Child Benefit can be made in the HMRC app or online and are automatically backdated for 3‌‌‌ ‌‌months, or the date of birth of the child if later.

New guidance on the charge has been published today and you may wish to share this with your employees.

Further information on both the NICs and High Income Child Benefit Charge measures can be found on GOV‌‌‌.UK.

Information on all of the measures announced can also be found on GOV‌‌‌.UK.

For an overview of all the tax legislation and rates announced, read the Overview of tax legislation and rates (OOTLAR).