Changes to National Insurance Contributions:

The government is cutting taxes for over 29 million working people. Note that this tax cut wouldn’t stop more people from going into higher rate tax bands as wages rise. But these will help employees and self-employed people have a little more money in their pockets.

The changes they are making are:

Class 1 employee national insurance contributions (i.e. the national insurance rate that employees pay) will be cut from 12% to 10% from January 6th 2024. This means the average worker on £35,400 will receive a tax cut of over £450 per year.

Class 2 self-employed national insurance contributions – the NIC rate that self-employed people paid who DON’T pay their income tax via self-assessment – is being abolished

Class 4 self-employed national insurance contributions – the NIC rate that self-employed people paid who DO pay their income tax via self-assessment – are reducing from 9% to 8% from 6th April 2024. The average self-employed person earning £28,200 will save about £350 per year in the new tax year.

What does this mean for you and your business: It means that your employees are getting less money deducted from their salary. If also means that if your business is making more than £50k in profits and therefore subject to a higher rate of corporation tax, it is worth considering how much you decide to pay yourself via PAYE and how much via dividends. 

Changes to National Living Wage:

From 1st April 2024, the National Living Wage will increase by 9.8% to £11.44 with the age threshold lowering from 23 to 21 years old. This represents an increase of over £1800 to the annual earnings of a full-time worker on the National Living Wage.

What does this mean for you and your business: It means that you need to check your salary rates, particularly for your younger employees and any low-paid workers. 

Full expensing on plant and machinery is now permanent

The full expensing scheme which originally came in for 3 years is now being introduced permanently. What this means in reality is that for every £1 your business invests in plant and machinery, your taxes are cut by up to 25p.