How should your payroll provider support you with the latest national insurance changes?
Building and maintaining payroll software is forever a moving target. For example, the most recent changes to National Insurance contributions, effective from January 6, 2024, have been the most recent rush for the industry.
Announced at the autumn statement these in-year changes, coming into force less than two months after they were announced, are not just mere number tweaks in the payroll systems; they represent a substantial shift in the financial landscape for both employees and self-employed individuals in the UK. This situation has put immense pressure on payroll technology vendors and payroll managers, especially considering the timing – immediately after the busy Christmas pay run period.
Understanding the changes: A quick overview
Before delving into the implications for payroll providers, let's summarise the key changes:
- The main rate of Class 1 National Insurance contributions for employees has been reduced from 12% to 10%.
- For the self-employed, the main rate of Class 4 National Insurance contributions is cut from 9% to 8% from April 6, 2024.
- The obligation to pay the Class 2 National Insurance contributions has been removed for those with profits above £12,570, effective from April 6, 2024.
- There are also new blended rates for directors to consider for the 2023/24 tax year.
The challenge for payroll software
The ripple effects of these National Insurance changes are a regular headache for software providers.
Payroll tech vendors have had to scramble to update their systems in time for the 6 January deadline, a process that involved considerable effort and resources over a short period of time. Payroll managers and payroll bureaus meanwhile were given additional line items to worry about during an already fraught holiday season, and just a few months before the end-of-tax-year rush.
In these scenarios, the choice of payroll provider can have major impacts for firms and bureaus. When it comes to software, not all tools are created equal – legacy platforms can be slow, expensive and imprecise to update, meaning that rushed updates can bring additional costs or uncertainty for their clients.
This scenario underscores the importance of working with software vendors deeply embedded within the industry. The right technology partner isn't just about having functional software; it's also about working with a provider who understands the nuances of the industry, anticipating changes, and responding swiftly to ensure minimal disruption to clients.
Staying ahead of change with BrightPay
BrightPay, Bright’s award-winning payroll software, is built and maintained by professionals who deeply understand the needs of accountants and bookkeepers. Over more than a decade, BrightPay has regularly updated and revised its architecture to enable fast back-end revisions with minimal disruption for our clients.
- Industry Insight: BrightPay's system design is based on our deep understanding of the accounting and bookkeeping sector, building new features and updates to meet the unique needs of this fast-changing industry.
- Responsive Updates: Our flexible core software is built to adapt quickly to legislative changes like the recent national insurance contribution adjustments, as well as new service offerings or changes in client needs.
- Comprehensive Support: We provide extensive support resources to assist clients through changes and updates, from training documents to webinars.
- User-Friendly Interface: Throughout any changes or updates, our simple layouts are designed to simplify complex payroll processes, making it easier for users to adapt to new regulations.
Evolving your payroll processes with reliable software
In today’s volatile economic climate, payroll bureaus and accountants must deal with constant regulatory changes. That’s why working with a reliable and knowledgeable software provider can have a significant impact on your ability to provide a consistent, valuable and efficient service for your clients, with the full knowledge that your tools are on your side.
Your choice of partner isn’t just about what works today, but investing in the future of your business. The right tools should evolve with your practice, the regulatory environment and the needs of your customers to ensure that you can make the strategic decisions you need to grow.
To find out more about how Bright’s tools can help you and your team stay ahead of whatever the market throws your way, why not book a demo of our award-winning software?
- 7 reasons why accountants are switching to BrightPay
- Empowering accountants with seamless company secretarial compliance
- Beyond the billable hour: Smart pricing tactics for accountants
You might also be interested in
Bright was created in 2021 when Thesaurus Software Ltd. and Relate Software Ltd. decided to join forces. Bright is a leading provider of accounting, payroll, tax and HR solutions to businesses across the UK and Ireland. We help thousands of accountants, bookkeepers and small to mid-sized businesses become more productive and efficient with our...