Autumn Statement 2023 NICs Changes
In the Autumn Statement, the Chancellor announced rate reductions and other changes to national insurance contributions.
Here we summarise those changes:
Employee Class 1 NICs, payable on salary between £12,570 and £50,270 will be payable at 10% instead of 12% (a rate of 2% on salary above £50,270 continues to apply). This change will take effect on 6 January 2024.
Class 4 NICs payable by self-employed workers on profits between £12,570 and £50,270 will be payable at 8% instead of 9% (a rate of 2% above £50,270 continues to apply). This will take effect on 6 April 2024.
The requirement for self-employed workers to pay Class 2 NICs (currently £3.45 per week) will be abolished with effect from 6 April 2024, though workers can still choose to pay Class 2 NICs to protect and increase their state benefits entitlements.
The figures of £12,570 above which employee Class 1 NICs and self-employed Class 4 NICs are payable will not change in April 2024 from their current levels, so the effect of inflation will bring more of the pay received by workers into the scope of NICs. Whether the caps above which the 2% rate applies will be similarly frozen will be announced in the Budget in the Spring.
There was no change announced to the rate of NICs payable by employers (currently 13.8% above £9,100) and no change to the annual employer allowance of £3,000. So the Government has chosen not to make it cheaper for employers to employ staff.
The changes bring the rates of employee NICs and NICs for the self-employed closer together (the difference is now 2% rather than 3%). However, the system continues to provide a financial incentive for workers to be self-employed rather than employed, due to the absence of employer NICs where the worker is self-employed.
About the author
Charles Goddard is a tax solicitor with over 20 years' experience of advising on the corporate tax aspects of a wide range of corporate and financial transactions. His clients range from multinational blue-chip institutions to private individuals.
Find out more about Charles and our corporate tax advice and consultancy services for business.
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