The 1.25% rise in National Insurance Contributions (NIC) will be reversed on the 6th of November 2022. Additionally, the planned Health and Social Care Levy, a separate tax due to come in from April 2023 will also be repealed.
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.
Until next time ...
ROGER EDDOWES Business Godparent
Would you like to know more?
If anything I've written in this blog post resonates with you and you're a bit worried about your own accounting software, or a little confused about the changes, it may be a great idea to give me a call on 01908 774320 and let's see how I can help.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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