Spring budget updates for payroll professionals

Chancellor of the Exchequer, Jeremy Hunt, delivered the spring budget of 2024 on 6 March. As

is always the case prior to a fiscal statement, the rumour mill went into overdrive regarding what

could be the big news of the day. This time around, there was intense speculation around cuts to

tax but as 6 March drew closer, the focus shifted to potential changes to National Insurance (NI).

The chancellor covered many areas during his speech, but many weren’t of huge relevance to

the payroll industry. There were, however, a few announcements for payroll professionals to be

aware of, which are covered in the following article.

The big one

If we’re honest, we already knew Hunt was going to cut the employee main rate of NI by 2p

before he actually said it, thanks to reports in the media. Towards the end of his budget speech,

he confirmed that employee main rate of NI would drop from 10p to 8p, from 6 April 2024. This

gave a very short period for software developers to implement the changes and for payroll

professionals to test those system updates to ensure they worked correctly. This change also

follows the previous reduction to NI, from 12p to 10p, which was announced in the autumn

statement 2023 and introduced from 6 January 2024.

Get ready for tax administration and maintenance day (TAMD)

There’s often a wealth of information within the budget’s accompanying documents which isn’t

covered in the actual speech. One of those pieces of information came in the form of the

announcement that a TAMD will be held on 18 April 2024. These are important days in the

CIPP’s policy and research team’s calendar, as there are often consultations and calls for

evidence which impact the payroll, pensions and reward professions. It’s expected there will be

proposals on how to tackle the tax gap and how to simplify and modernise the tax system. The

CIPP will be representing the views of members and the wider payroll profession within any

responses it sends, so keep your eyes peeled for ways to get involved.

Investment zones

The chancellor provided an update on investment zones in his speech. This is important for

payroll professionals because there’s a zero-secondary rate of employer NI contributions (NICs)

which can be applied to eligible employees’ earnings over the secondary threshold (£9,100 per

annum) up to and including the investment zone upper secondary threshold (IZUST) (£25,000

per annum), where the conditions to claim the relief are met. The balance of earnings over the

IZUST will be charged at 13.8%. The calculation of primary class 1 NICs is unaffected.

HM Revenue and Customs (HMRC) news

It’s not unusual to see updates regarding HMRC within fiscal statements, and the spring budget’s

accompanying documents didn’t disappoint. It was confirmed that £140 million will be spent on

improving HMRC’s ability to manage tax debts, to help individuals and business taxpayers out of

debt more quickly and to collect due taxes. Additionally, there’s an ambition to simplify HMRC’s

digital services, and there will be a focus on supporting self-assessment taxpayers by introducing

a new time to pay arrangement from September 2025.

The high-income child benefit charge (HICBC)

This won’t affect payroll, strictly speaking, but it is an area of interest for many, and it may be that

employees or clients’ employees come to payroll for advice in this area. The HICBC threshold is

due to increase from £50,000 to £60,000 from April 2024, with the end of the taper increasing

from £60,000 to £80,000. The government’s long-term aim is to move the system on to a

household income test (rather than an individual income test) for eligibility, but this will take time

as HMRC will require additional information. The intention, therefore, is for this to be introduced

from April 2026. So, be prepared for requests to change salary sacrifice arrangements, a

common method used by those caught by the HICBC to manage their marginal ‘tax’ rate.