The government announced a cut to the main rate of Class 1 employee NICs from 12% to 10% from 6 January 2024 and a cut to the main rate of Class 4 self-employed NICs from 9% to 8% from 6 April 2024.  It has also announced that no one will be required to pay Class 2 self-employed NICs from 6 April 2024. Details of this change are:

• from 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs but will continue to receive access to contributory benefits including the State Pension
• those with profits between £6,725 and £12,570 will continue to get access to contributory benefits including the State Pension through a National Insurance credit without paying NICs as they do currently   
• those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so.

The government will set out next steps on Class 2 reform next year.

Please take steps now to start work with your payroll software provider, and where applicable IT delivery partners, to get ready to implement the change to Class 1 employee NICs as these come into effect from 6 January 2024.

HMRC’s Basic PAYE Tools product will be updated to reflect this change.

Please go to GOV.UK or click here for further information.