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Welcome to our articles and news snippets. The bookkeeping landscape is fast-paced and we pride ourselves on staying up to date on the latest comings and goings.
An increase to the National Living Wage
The National Living Wage is going up to £11.44 per hour and will apply to 21- and 22-year-olds for the first time. This’ll happen from April next year.
It’s good news for those battling with inflation, but it could also have another added benefit…
Right now, you need to earn more than £10,000 to qualify for auto-enrolment, but the National Living Wage rise could bring some people above the threshold for the first time. Meaning they’ll get a pension plan automatically opened for them and paid into on their behalf by their employer. Making saving for their future a little bit easier.
Pensions plans are investments. They can go down as well as up in value and may be worth less than what was paid in. Tax rules and legislation may change and your individual circumstances and where you live in the UK will have an impact on the tax you pay.
The information here is based on our understanding in November 2023 and should
not be taken as financial advice. If you’re unsure please speak to financial adviser.
Income Tax — basis period reform
HMRC has been working on creating more awareness for the basis period reform changes from April 2024.
In February 2024, HMRC will be sending our unrepresented customers a mailshot which will give information on the basis period reform changes and signpost them to the support available to help with the changes.
HMRC will also be releasing a basis period reform YouTube video that will help our customers with the changes and highlighting what support is available.
Further guidance on Income Tax: basis period reform is available on GOV.UK.
National Insurance contributions rates changes reminder
We are reminding clients that changes are due to take effect on 6 April 2024.
On 6 March 2024 the Chancellor announced:
- a cut to the main rate of Class 1 employee National Insurance contributions from 10% to 8% from 6 April 2024
- 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%
Other changes announced previously at Autumn Statement 2023 to take effect in April 2024 of particular interest to your self-employed clients include:
- Abolition of the requirement to pay Class 2
- 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 credit has been frozen at £6,725
Most people pay Class 2 and Class 4 National Insurance through Self Assessment. The government will consult on further details of the Class 2 reform later this year.
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