Are you ready for the latest payroll changes?

The start of April will see a number of changes to key payroll rates and processes in the UK.

To help you prepare for these upcoming amendments to the payroll rules, our experienced team have put together a summary of key changes.

Minimum wage

From 1 April 2024, the National Minimum Wage (NMW) and National Living Wage (NLW) rates are increasing substantially – placing additional pressure on your payroll and businesses.

National Living Wage

From this date the NLW to £11.44 per hour – a substantial rise of £1.02 per hour or a 9.8 per cent increase.

To complicate matters further, the eligibility age for the NLW has been lowered, making all workers aged 21 and over eligible for the NLW.

This is a crucial update that broadens the scope of the NLW, impacting many employers and their payroll considerations.

National Minimum Wage

Furthermore, the NMW rates for younger workers and apprentices will also see changes:

  • For 18-20-year-olds, the rate will rise to £8.60 per hour (up 14.8 per cent).
  • For 16-17-year-olds, the new rate will be £6.40 per hour (up 21.2 per cent).
  • The Apprenticeship rate will increase to £6.40 per hour (up 21.2 per cent).

These updates necessitate a review and adjustment of your payroll processes to comply with the new wage standards and eligibility requirements.

National insurance

The Government will reduce National Insurance contributions for both employees and self-employed individuals for the second time this year.

The Chancellor announced a further two percentage points reduction in the 2024 Spring Budget.

According to the Treasury, this will save the average employee £450 a year, totalling £900 when combined with the previous year’s reduction.

How is National Insurance changing in 2024?

The amount you pay in National Insurance contributions depends on your employment status and income level.

The Government has made several adjustments to National Insurance rates, including two reductions this year.

From January 2024, employee rates dropped from 12 per cent to 10 per cent on earnings between £12,570 and £50,270. Starting in April, this rate will decrease to eight per cent.

Self-employed individuals had to wait until April for their rate to be cut, but they will benefit from two reductions at once.

The rate for Class 4 National Insurance contributions will fall from nine per cent to six per cent on earnings within the same bracket.

Additionally, from April, they will no longer pay Class 2 National Insurance, which currently costs £3.45 weekly.

The rate of employer National Insurance remains the same.

Week 53

Week 53 creates a special situation in the payroll calendar that is especially relevant for businesses managing their payroll on a weekly, fortnightly, or every four weeks, particularly when paydays fall on Thursdays or Fridays in the 2023/24 tax year.

This occurs when the tax year, ending on 5 April, introduces an extra pay period due to how the days of the year divide up, affecting specific payroll cycles.

If your payroll is monthly or on days other than Thursday or Friday, the Week 53 scenario does not impact you.

The relevance of Week 53 hinges on your regular payday within the tax year, often arising from the tax year’s days not splitting neatly into whole tax weeks.

The 2023/2024 tax year stands out because it includes a leap day in February, adding to the calendar’s complexity. This year, Week 53 falls on:

  • Thursday, 4 April 2024
  • Friday, 5 April 2024

Identifying a Week 53 in your payroll

To check if you’ll face a Week 53 in the 2023/2024 tax year, confirm whether your standard payday is on a Thursday or Friday, coinciding with these dates for your final payroll of the year:

  • Weekly payrolls: Thursday, 28 March or Friday, 29 March 2024
  • Fortnightly payrolls: Thursday, 21 March or Friday, 22 March 2024
  • Every four weeks payrolls: Thursday, 7 March or Friday, 8 March 2024

If your payroll aligns with these dates, prepare to process payments during Week 53.

Managing Week 53

Dealing with Week 53 doesn’t require changing your regular payroll procedures. Simply ensure the processing date is accurate and proceed as normal.

It’s crucial not to shift your usual payday to avoid Week 53, as this could complicate your payroll calculations and necessitate later adjustments.

If you mistakenly skip Week 53 by choosing an incorrect processing date, it’s important to correct this mistake quickly.

Here to help

Understanding and implementing these changes can be challenging so our dedicated payroll team is here to assist you in navigating these adjustments smoothly.

Our team can offer guidance on payroll management, and strategies to mitigate the impact of increased labour costs on your business.

We encourage you to reach out to us for a detailed discussion on how these changes may specifically affect your business and to explore tailored solutions that meet your unique needs. Please contact Nicola Shaw – DD 0113 5317302 or email – nicola.shaw@kirknewsholme.co.uk

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