Reduction in the rate of National Insurance Contributions - Employers Actions

20th October 2022

HMRC has notified the Reduction in the rate of National Insurance Contributions and reversal of the Health and Social Care Levy — employer actions.

On 22 September 2022 the government announced in-year reductions to National Insurance rates and the cancellation of the Health and Social Care Levy as a separate tax. HMRC emailed employers on our database to make sure awareness of the key changes which are:

National Insurance contributions 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) National Insurance contributions
the ringfenced Health and Social Care Levy of 1.25% due to be introduced from April 2023 will not go ahead.

We also asked employers to remove (from 6 November 2022) the temporary generic message on payslips for the tax year (2022 to 2023) explaining the National Insurance contributions uplift, and we confirmed full detail on all the changes would be published on GOV.UK in due course.

HMRC said, "
We wanted to take the opportunity now to remind employers to make the necessary changes to be ready for November 2022 payroll. We realise the timeline is tight and some employers may face challenges in implementing the changes in time. We will be directing employees to their employers to correct any overpaid National Insurance contributions in the first instance. Where needed, employers can then make corrections by submitting a revised Full Payment Submission (FPS)."

On 22 September 2022 payroll software developers were made aware of the actions they need to take and provided with the relevant technical documents to facilitate software changes. You should therefore contact your payroll software developer initially with any queries. Always make sure that you are using the latest version of your payroll software.

HMRC's Basic PAYE Tools will also be updated to calculate the correct National Insurance contributions from 6 November 2022 and therefore if you are a user of Basic PAYE Tools, you should make sure you install this new update, which will be available to download from 4 November 2022. For any employee payments due on or after 6 November 2022, you must be using Basic PAYE Tools version 22.2 (or later). The version number appears in the bottom left-hand corner of the Basic PAYE Tools screen. You can download Basic PAYE Tools from GOV.UK where you will also find comprehensive help on installing this software.

Electronic payment deadline falls on a weekend
In October the electronic payment deadline of 22 October 2022 falls on a Saturday. So, to make sure your payment for that month reaches us on time, you need to have cleared funds in HMRC's account on or before 21 October 2022 unless you are able to arrange a Faster Payment.

Remember that it’s your responsibility to make sure your payments are made on time and if your payment is late, you may be charged a penalty.

So that you know what date to initiate your payment and make sure we have it on time, you need to speak to your bank or building society well in advance of making your payment to check single transaction, daily value limits and cut off times.