Information from HMRC on changes to NI rates

Date: Thursday 22 September 2022

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The government has announced in-year reductions to National Insurance rates and the cancellation of the Health and Social Care Levy as a separate tax. HMRC are highlighting these changes to allow businesses to prepare and take the necessary actions.

The key changes are:

• National Insurance contribution (NIC) rates will be cut by 1.25 percentage points for employees, employers and the self-employed, effectively reversing the uplift introduced in April 2022 for the rest of the tax year. This cut will take effect from 6 November 2022 and it will cover Class 1 (both employee and employer), Class 1A , Class 1B and Class 4 (self-employed) NICs
• the ring-fenced Health and Social Care Levy of 1.25% due to be introduced from April 2023 will also not go ahead.

HMRC had previously asked employers and software developers to include a temporary generic message on payslips for the tax year (2022 to 2023) to explain the reason for the NICs uplift. This message will not be applicable from 6 November 2022, and it should be removed from payslips with effect from this date.

The full detail on all of these changes will be published by HMRC on GOV.UK in due course, but HMRC are asking businesses to make the appropriate changes in order to be ready for November 2022 payroll. Businesses using HMRC Basic PAYE tools are advised that this software will be automatically updated to take account of these changes.

HMRC realises the timeline for this is tight and some employers may not be able to implement the changes in time. HMRC will be directing employees to their employers to correct any overpaid NICs in the first instance.

HMRC has also written to Payroll Software Developers to make them aware of these changes and asked them to take the relevant actions. Businesses should therefore contact their software developer initially with any queries.

Please note that these changes are subject to Parliamentary approval.

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