Employment tax update - March 2024

This bulletin follows the release of the February Agent Update (Issue 117) and the Government’s Spring Budget.

The Spring Budget

In relation to the Spring Budget, the announcement most relevant to employment taxes and reward activities include:

Reforms to the taxation of the non-UK domiciled regime

• See our summary of the changes and detailed analysis.

NICs – further changes to Class 1 and Class 4 National Insurance Contributions

• In the Spring Budget the Government announced a further 2p cut to the main rate of Class 1 NICs (on top of what was announced in the Autumn Statement). As the changes announced in the Autumn Statement have taken effect already, the current rate of 10% will be reduced to 8% for income up to £50,270. This reduction will only impact employed individuals and will take effect from 6 April 2024.
• The Government also announced an additional 2p cut to the Class 4 NICs rate. As the reduction set out in the Autumn Statement (a cut from 9% to 8%) is yet to take effect, the impact of this additional 2p cut will be seen on 6 April 2024 as a reduction in the rate from 9% to 6% (effectively a combined 3p cut) for profits up to £50,270.

Other notable changes announced in the Spring Budget

• Reforms to the High Income Child Benefit Charge (including an increased in the threshold from £50,000 to £60,000).
• Increase in the VAT registration threshold from £85,000 to £90,000.

As more guidance is released in relation to the changes above, we will publish further information setting out the impact on employees and employers (as well as self-employed individuals) in subsequent Employment Tax bulletins.

February Agent Update

This month the content from the Agent Update most relevant to employment taxes and reward activities includes:

Paying PAYE

• HMRC have set out several tips on how to ensure PAYE payments are allocated correctly. Broadly these tips include:
  • ensuring the correct 13-character accounts office reference is used (see more guidance on this); and
  • setting up a variable direct debit for collecting PAYE (access the relevant HMRC service).

Income tax basis period reform

• HMRC are still trying to raise awareness for the basis period reform changes from April 2024.
• HMRC’s efforts include sending unrepresented customers an email mailshot providing more information on the changes and producing a YouTube video explaining the changes and informing customers of where they can access support.
• Further guidance can be found on the Government’s website.