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Employment Taxes

The Requirement to File a Self-Assessment Return
The government will legislate so that individuals who only have PAYE income do not have to complete a tax return.

Tax Avoidance
Promoters of tax avoidance schemes will be subject to a new criminal offence, which will allow HMRC to bring disqualification action against directors of companies involved in promoting tax avoidance.

Construction Industry Scheme (CIS)
The CIS scheme is being reformed regarding the Gross Payment Status (GPS) compliance test. The GPS is where a contractor can pay without a deduction of CIS tax. HMRC has been concerned that this status is being used too much, and the reforms will include measures to allow HMRC to withdraw this status where fraud is detected.

Income Tax
Many of the personal allowances have been frozen until 2028, bringing some people into the tax system for the first time. The Autumn Statement did not announce any let-up to this but did confirm that the Blind Person’s Allowance (BPA) and the Married Couple’s Allowance (MCA) will be uprated for 2024/25.

There was no change to the main rates of Income Tax (20%, 40% and 45%) or the thresholds, which have also been frozen until 2028. But this must be considered with the fact that powers are shared with Wales and Scotland:

– Wales has the power to vary Income Tax percentages in line with the tax bands that apply in England and Northern Ireland
– Scotland has greater powers to set its own Income Tax rates and bands.

So, we must wait until their budgets on 19 December 2023 to get the complete UK picture.

Company Car and Van Charges

For P11Ds, where a Van Benefit Charge or a Car & Van Fuel Benefit Charge arises (because a vehicle is provided as a benefit by the employer), the rates are frozen for 2024/25 at the current tax year levels.

National Insurance
Perhaps the biggest announcements were regarding National Insurance that applies to employees.

Class 1

From 06 January 2024, the main rate of Class 1 Primary (employee) National Insurance Contributions will reduce from 12% to 10%. This is within the current tax year 2023/24. The following are impacted:

– Employees in NI category letters A, F, H, M and V
– Employees earning between the Primary Threshold and the Upper Earnings Limit

For payments made on and after 06 January 2024, National Insurance for employees will be calculated as follows:

Table Letters
A / F / H / M and V
C / S
B / I
J / L and Z
Earnings up to LEL
Earnings between LEL and PT
Earnings between PT and UEL 
Earnings above UEL 

There is no reduction in the main percentage that applies to employers.

You are strongly advised to contact your software provider, who will have to make this change in software for payments made on and after 06 January 2024.

Class 2

This is the National Insurance that is paid at a weekly flat rate (currently £3.45 per week) by the self-employed with profits above £12,570.

From tax year 2024/25, this is being abolished. But where the profit is above £6,725, contributory benefits, including the State Pension, can still be accessed even though no NI is payable.

Where profits are below £6,725, contributory benefits, including the State Pension, can still be accessed by paying voluntary Class 2 National Insurance. The weekly rate has been frozen at £3.45 for 2024/25 rather than increasing by any inflationary measure.

Class 3

This has been frozen in 2024/25 at its 2023/24 level (£17.45 per week).

Class 4

This is the other National Insurance payable by the self-employed where there is a profit (between £12,570 and £50,270). The rate between these thresholds is 9% in 2023/24, and it will reduce to 8% in 2024/25.

National Insurance Contributions Rates and Thresholds

For the 2024/25 tax year, all rates and thresholds remain unchanged, remembering that the main rate employees pay has been reduced to 10% from 06 January 2024.

Employment Allowance

This is the amount that certain employers can claim from HMRC and use to offset their National Insurance liability. There was no mention of this in the Autumn Statement or any accompanying documents; therefore, this remains at £5,000 for eligible employers.

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