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Businesses must be ready for the latest change to National Insurance, says TWP

Employers have already had to get to grips with several changes to wages and National Insurance this year, but TWP warns that additional complexity is just around the corner.

From 5 July, the National Insurance threshold for employees is changing once again in a bid to help taxpayers with the cost-of-living crisis and the recent 1.25 per cent increase in National Insurance rates.

After this date, the primary threshold – the point at which an employee starts paying National Insurance contributions (NICs) – will increase from £9,880 per year to £12,570 per year.

This will bring National Insurance in line with Income Tax, meaning that thousands of lower-paid workers will no longer have to pay NICs at all, while most other employees will see less of an impact from NI rates rising.

Surrey-based TWP says that this will be a big help to many. However, the change not only brings additional complexity and administration to the payroll systems of businesses but doesn’t affect the contributions made by employers.

“The assistance to employees given by the Chancellor in this measure will be important to many families during these challenging times,” said Elaine Bright, TWP’s Payroll Manager.

“Unfortunately, the same savings haven’t been passed on to employers, who are not only having to deal with an increase in NICs due to the higher rate but must now administer an increasingly complex payroll system.”

Elaine recommends that given these changes, and the other recent measures related to pay and benefits, businesses review their payroll systems to make sure they are up to date and effective.

“Penalties for getting things wrong when it comes to pay, tax and NICs can be significant, so it is worth looking at your payroll processes again and seeking professional advice,” she added.

To find out more about TWP’s payroll services, please contact us.