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Payroll changes: National Insurance and holiday pay

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National Insurance changes
In his Autumn Statement 2023, the Chancellor, Jeremy Hunt, announced that there will be a cut to the current rate of National Insurance for employees from 12% to 10%. This will be effective from the January 2024 tax period.

Payroll software providers now have the challenge of updating their systems to reflect this change, on a tight deadline. Make sure your provider has the changes in place in time for your January payroll to remain compliant and accurate with your payroll deductions.

An employee on category A National Insurance, working 40 hours a week on the current minimum wage of £10.42, will see a £15.17 increase in their monthly net pay.

Holiday pay consultation
The Department for Business and Trade has released its responses to the consultation on holiday pay calculations. The Government has decided it won’t proceed with proposals to introduce a 52-week holiday entitlement reference period.

This means holiday entitlement can revert to being calculated as 12.07% of hours worked in a pay period and rolled-up holiday will once again be allowed for irregular hours/part-year workers only.

Currently, the implementation dates for the above haven’t been confirmed as legislative changes will be required.

Once we’ve received more information and guidance from HMRC, we’ll release a further update.

Need help?
If you have any queries, please get in touch with our Payroll team. Call 0330 024 0888 or email

Dannielle Chapman


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Larking Gowen


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