The Government recently announced a reversal of the 1.25% rise in National Insurance Contributions. However, I wonder if they thought of the practicalities of that change ...
The increase came in on the 6th of July 2022, but was announced in the Spring Statement in March. This gave both employers and software developers three months to make the necessary changes to their payroll software!
Now, software developers have got 5 weeks to change back and even less time for employers who plan their payrolls in advance. If accounting software can't be updated in time, then it's unclear how employers will retrospectively correct their payslips via refunds, which will cause a headache for HMRC with the extra paperwork.
Class 1 NIC which is paid by both employers and employees is normally calculated on a pay period basis whereas other liabilities are calculated on an annual basis.
As an example, directors get Class 1 NIC calculated annually, Class 1A on benefit in kind, Class 1B on PAYE settlement agreements and Class 4 NIC is paid by the self-employed on their profits.
It's going to be interesting to see which software developers get the changes done in time, but if you're a bit worried about your own accounting software, or a little confused about the changes, then as The Business Godparent, I'm always here to help you.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.