Following the Autumn Statement announcement on 22nd November 2023 of a 2 percentage point drop in the standard rates of National Insurance, SD Worx has begun readying its payroll calculation engines for the change.
So there are two change points as a result of the announcement:
- Payments from 6th January 2024
- Payments from 6th April 2024
And then there is the consideration for Directors and Office holders who have an annual calculation assessment resulting in a directors blended NIC rate.
The following are to be used for payments from 6th January 2024 onwards for employees and non-cumulative director calculations. These are not to be used for payments for Director annual method, or Directors alternate method for the final payment at leaving or the last tax period of the year where contributions are to revert to the annual method.
| Primary Contributions (employee) | Secondary Contributions (Employer) | ||||||||
| A/F/H/M/V | B/I | C/S | J/L/Z | X | A/B/C/J | H/M/V/Z | F/I/L/S | X | |
| Below LEL | Nil | ||||||||
| LEL to PT | 0% | Nil | 0% | Nil | N/A | ||||
| PT to UEL / UST / AUST | 10% (12%) | 3.85% (5.85%) | 2% | ||||||
| LEL to ST | N/A | 0% | 0% | 0% | Nil | ||||
| ST to FUST | 13.8% | ||||||||
| FUST to UEL / UST / AUST / VUST | 13.8% | ||||||||
| Above UEL / UST / AUST / VUST | 2% | Nil | 2% | Nil | 13.8% | ||||
And for Mariner related National Insurance Contributions:
| Primary Contributions (employee) | Secondary Contributions (Employer) | |||||
| R/G/Y | T | W | Q/P | R/T/W/Q | G/Y/P | |
| Below LEL | Nil | |||||
| LEL to PT | 0% | Nil | 0% | N/A | ||
| PT to UEL / UST / AUST | 10% (12%) | 3.85% (5.85%) | 2% | |||
| LEL to ST | N/A | 0% | 0% | |||
| ST to FUST | 13.3% | |||||
| FUST to UEL / UST / AUST / VUST | ||||||
| Above UEL / UST / AUST / VUST | 2% | Nil | 2% | 13.3% | ||
What is different for directors?
There are two different director calculation types for National Insurance: Annual (the default standard) and alternate.
Annual require the operation of full year bandings to prevent directors from avoiding National Insurance contributions.
The alternate method allowed the operation of NI in the same way as employees except for the last pay period in a tax year the director is paid. At that point there is an obligation to recalculate using the annual method.
As directors have an annual method, with the January 2024 change, there will be 12% due for 9 months followed by 3 months at the new 10% rate. When you blend those together you achieve a directors NIC rate of 11.5% for the full 2023/2024 tax year. This new blended rate applies to all directors, even those who may already have left and those who are appointed mid year. So employers may need to do an element of correction for some who have already left to enable them to receive the NI rebate amount due.