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National Insurance changes from 6 January 2024

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Summary

Information on National Insurance (NI) changes announced in the Autumn Statement 2023 and how they affect Sage 50 Payroll.

Resolution

The biggest change is the reduction of the main employee NI rate on NI Category A, from 12% to 10%. This applies to NI charged between the Primary Threshold (PT) and the Upper Earnings Limit (UEL) from 6 January 2024.

 NOTE: For the 2023/2024 tax year, the PT is £12,570 per year, £1,048 per month, or £242 per week. The UEL is £50,270 per year, £4,189 per month, or £967 per week. 

For category A directors, HMRC have set a new annualised employee NI rate of 11.5% that applies to the whole 2023/2024 tax year. Find out more below in the Directors section, under the NI calculation heading.

What else is changing?

  • NI categories F, H, M and V also reduce the employee NI rate from 12% to 10% between the PT and UEL from 6 January 2024
  • For NI categories B and I, the employee NI rate between the PT and UEL reduces from 5.85% to 3.85% from 6 January 2024

For directors, a new employee NI rate applies from the PT to UEL from 6 April 2023:

  • 11.5% for NI categories A, F, H, M and V
  • 5.35% for NI categories B and I
     NOTE: Employers NI is unchanged.

Software update

Sage 50 Payroll v30.01 is now available, and it includes the changes to NI legislation.

If you haven't already updated your software, you can download and install Sage 50 Payroll v30.01 now.

NI calculation

The way this change calculates is different for employees and directors.

Employees

The new rate of employee NI applies to payments from 6 January 2024 onwards.

Directors

Director's NI can be calculated on either Pro rata basis, or annual basis. If you're not certain which option one or more of your Directors are set to, you can .

In Sage 50 Payroll v29.03, NI for Directors on Annual basis is calculated using the annualised rate of 11.5%. This rate applies for any period you process in the 2023/2024 tax year, including if you were to reprocess prior periods originally based on the older rates.

Directors on Pro-rata basis use the NI rate in effect based on the process date, either 10% or 12% in the same way Employee NI calculates. Then, in their final payment of the tax year, this automatically switches to the annual calculation using the annualised rate.