Chancellor Philip Hammond indicated the first stages in streamlining the National Insurance contributions (NICs) regime in his first and only Autumn Statement, by announcingd that from April 2017 the employee and employer thresholds will both be pegged at £157 per week
‘There will be no cost to employees, and the maximum cost to business will be an annual £7.18 per employee,’ Hammond told MPs.
This measure limits the increase in the weekly employer NICs secondary threshold to £1 in 2017-18. The secondary threshold is the point from which employer NICs is charged and, as a result of CPI indexation, was due to increase by £2 per week from 2017-18.
Now, the secondary threshold for employer NICs will be equalised with the primary threshold for employee NICs at £157 per week in 2017-18.
HMRC assessments suggest this will produce an additional £170m for the Exchequer in 2017-18, reducing to £145m per year thereafter for the period up until 2021-22.
Genevieve Moore, partner at Blick Rothenberg, said: ‘It is unlikely that this will be a barrier to employment, but the largest employers will pay the most – and they’re not necessarily the most profitable businesses.’
HMRC has also confirmed that announced at Budget 2016 and following consultation, the government will legislate in Finance Bill 2017 to simplify the PAYE settlement agreement (PSA) process.
This will have effect in relation to agreements for the 2018 to 2019 tax year and subsequent tax years.
The consultation outlined a number of proposals for the new PSA process, which included removing the requirement for upfront agreements so that employers would instead self-assess what to include. It also looked at online returns made more frequently, and at bringing payment and calculation dates forward to align with the P11D deadlines.
HMRC also proposed removing the ‘minor’ condition following the introduction of the trivial benefits rules, and providing more guidance on the ‘irregular’ and ‘impracticable’ criteria.
