Editor’s Note: This is a summary of everything global payroll professionals need to know from U.K. Chancellor of the Exchequer Jeremy Hunt’s Autumn Statement 2023.
On 22 November 2023, Hunt took to the Houses of Parliament to deliver the Autumn Statement. Of interest to payroll professionals, specifically, was the following:
Changes to National Insurance
Hunt announced changes to National Insurance (NI) contributions.
There was news for self-employed individuals that included the following:
- From 6 April 2024, class 2 National Insurance contributions (NICs) for the self-employed will be abolished
- There will a cut to class 4 NICs, which is the main rate of self-employed NI, to also take effect on 6 April 2024, reducing the rate to 8%
There was also news regarding changes to class 1 NICs paid by employees. The chancellor stated that the main rate of class 1 NI for employees would be reduced by two percentage points, from 12% to 10%. For a moment, we assumed this would be implemented from the start of the next tax year, on 6 April 2024. Instead, the legislation has been pushed through so that the changes took effect from 6 January 2024.
Any employers or service providers that haven’t been able to amend their payroll system in time for that January date can reimburse any overpayment of NI to employees in subsequent months.
This mid tax-year change also has broader implications. For example, directors will have a blended NI rate for tax year 2023-2024, where employers use the standard cumulative annual method.
National Minimum Wage, National Living Wage Rates
Prior to the Autumn Statement, the government had already confirmed that the National Living Wage (NLW) would increase to at least £11 for pay periods beginning on or after 1 April 2024. Shortly before Hunt’s announcement, the Chartered Institute of Payroll Professionals (CIPP) received the news that the NLW would increase to £11.44, and we also got clarity on what the other National Minimum Wage (NMW) rates will be. Meanwhile, the NLW will also apply to workers age 21 and older from the same date, meaning the abolition of the 21-22-year-old rate going forward.
Table 1 shows the new rates and associated percentages in full.
2024 National Living, Minimum Wage Rates
| |
NMW rate from 1 April 2024 |
Increase in pence |
Percentage increase |
| National Living Wage (21 and over) |
£11.44 |
£1.02 |
9.8% |
| 18-20 Year Old Rate |
£8.60 |
£1.11 |
14.8% |
| 16-17 Year Old Rate |
£6.40 |
£1.12 |
21.2% |
| Apprentice Rate |
£6.40 |
£1.12
|
21.2% |
| Accommodation Offset |
£9.99 |
£0.89 |
9.8% |
Pension Status
The government promised to honour its “triple lock” pledge by increasing the state pension by 8.5% in April 2024. This is in alignment with average earnings growth. As a reminder, the “triple lock” means that the state pension increases each tax year by the highest of the following:
- 2.5%
- Average earnings growth
- Inflation
To address the longstanding issue of “small pension pots,” the government published a call for evidence (that closed in January 2024), which considers the benefits of a lifetime provider model. This would mean when an individual moves to a new employer, they could have the right to nominate the pension scheme their employer pays contributions to. This could have huge ramifications for payroll professionals, as they could potentially be paying contributions across to multiple pension providers. We will wait to see what the government’s response to the call for evidence is.
Changes to Benefits
All working age benefits delivered by the Department for Work and Pensions (DWP) will be uprated by the September 2023 consumer price index inflation rate of 6.7% for 2024-2025. This will have an impact on universal credit payments. Additionally, the blind person’s allowance (BPA) and the married couple’s allowance (MCA) will increase by the same rate, which means the new rates for 2024-2025 will be £3,070 for the BPA and between £4,280 and £11,080 for the MCA.
While the Autumn Statement of November 2023 didn’t contain a large amount of information for payroll professionals, the changes announced will impact the industry substantially. We now look towards the spring budget of 2024 on 6 March. With a general election on the horizon, it will be interesting to see what key announcements will be delivered, some of which could have substantial implications for the payroll, pensions, and reward industries.