HMRC has sent out reminders to accountants and tax agents about the upcoming National Insurance changes for their clients, which come into force on 6 April 2024.
The changes, announced by the Chancellor in his March Spring Budget, included a cut to the main rate of Class 1 employee National Insurance contributions from 10% to 8%. And National Insurance contribution rates for the self-employed across the UK will be cut by a further 2 pence on top of the 1 pence cut to 8% announced at Autumn Statement 2023. This means that, from April 2024, the main rate of Class 4 National Insurance contributions for the self-employed will now be reduced from 9% to 6%.
Of particular interest to agents with self-employed clients, HMRC said other changes announced at the 2023 Autumn Statement and set to take effect in April 2024 include:
· abolition of the requirement to pay Class 2 NI.
· self-employed people with profits above £12,570 will no longer be required to pay Class 2 National Insurance contributions, 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 National Insurance contributions as they do currently.
· those with profits under £6,725 and those who pay Class 2 National Insurance contributions voluntarily to get access to contributory benefits including the State Pension, will continue to be able to do so — the weekly rate they pay will be frozen at £3.45 for 2024 to 2025, rather than rising by the Consumer Price Index (CPI) to £3.70.
· the Small Profits Threshold — the point at which the self-employed start to receive National Insurance credits — has been frozen at £6,725
the tax authority said: “Most people pay Class 2 and Class 4 National Insurance through Self Assessment.
“Agents may wish to remind clients that they must tell HMRC when they become self-employed as a sole trader or as a business partnership.”
It added: “The government will consult on further details of the Class 2 reform later this year.”
