Many recruiters assist or manage the payroll for their clients, especially where temporary workers are concerned. That is why you must stay on top of the latest changes in legislation.
There has already been considerable change to the rules surrounding National Insurance this year, but further changes ahead could add complications to the payroll process.
From 6 July, the National Insurance threshold for employees is changing once again in a bid to help taxpayers with the cost-of-living crisis and the recent 1.25 per cent increase in National Insurance rates.
After this date, the primary threshold – the point at which an employee starts paying National Insurance contributions (NICs) – will increase from £9,880 per year to £12,570 per year.
This will bring National Insurance in line with Income Tax, meaning that thousands of lower-paid workers will no longer have to pay NICs at all, while most other employees will see less of an impact from the NI rates rise.
This change not only brings additional complexity and administration to the payroll systems of businesses but does not affect the contributions made by employers, who will continue to pay a higher rate following the increase in rates in April for all employees earning £175.01 or more a week or £9,100 per annum.
Given these changes, and the other recent measures related to pay and benefits, businesses review their payroll systems to make sure they are up to date and effective.
Recruiters and the businesses they support may also want to look at ways of minimizing the NI that they pay by exploring other benefits, such as pension contributions or salary sacrifice schemes.
If you need further advice on employment costs or the changes to NI, please contact us.