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Is Christmas cancelled for payroll teams?

19th Dec 2023
Brought to you by
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Sage is the market leader for integrated accounting.

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The holiday season is always a busy time of year, and particularly for those working with payroll. This year, the recent National Insurance (NI) announcements in the budget have added a new set of challenges and more complexity in the lead up to Christmas. 

So, have the holidays really been cancelled for payroll professionals? 

Read on for a summary of the changes, insights from the Chartered Institute of Payroll Professionals (CIPP), and ways that payroll teams can ease workloads, help ensure compliance, and save the wintry evenings from making manual corrections to payslips.

The NI Conundrum: A mid-year challenge

Starting 6th January 2024, the NI rates are set to change mid-tax year, a rare occurrence that adds complexity to the already busy January payroll run. 

Key changes:

  • Class 1 employee NI contributions reduced to 10% from 6th January 2024.
  • Employers and payroll service providers need to update their systems promptly to reflect these changes.
  • The Lower Earnings Limit (LEL) is frozen at £6,396 per annum, benefiting low-income workers.
  • Self-employed individuals see Class 2 NI abolished and Class 4 NICs cut to 8% from April 2024.

These changes, while beneficial to employees in the long run, pose immediate challenges for payroll teams. 

Indeed, frustration at the continuous mid-year alterations have been shared by many – from Accountantcole commenting, “I wish they’d stop changing NI mid-year”, and Mr_awol who replied, “I could practically hear my payroll departments thumping the desks at that point”.

Jeremy Hunt’s Autumn Statement: a dual narrative

The Autumn Statement presented by Jeremy Hunt brought to light significant changes in NICs, affecting both employed and self-employed individuals. 

Notably, the main class 1 employee NIC rate cut from 12% to 10% – effective from January 2024 – represents a significant shift. While the maximum annual saving could reach £754, the average worker stands to gain approximately £450 a year.

This strategy, while costing the Treasury an estimated £9bn per annum, aims to benefit many workers, from nurses and teachers to police officers and night-shift cleaners.

The self-employed segment: special attention required

Self-employed individuals see a distinct set of changes. The abolition of Class 2 NI and reduction of Class 4 NICs from April 2024 signify a focused effort to support this sector. 

Additionally, maintaining the Small Profits Threshold and the option to pay voluntary Class 2 NICs at a frozen rate underlines the government’s intent to support lower-income self-employed individuals.

Navigating early payment dates and reporting

Bringing the pay date forward over the Christmas period is a common practice to avoid the bank holidays and allow for that last-minute dash to finish off the Christmas shopping. Yet, for payroll teams, there is some concern around compliance.

The CIPP’s research shows an increase in non-compliance, from 19% to 26.5% in 2023. This issue primarily revolves around the recording of the contractual pay date on the full payment submission (FPS), irrespective of the actual payment date. 

Sage Payroll can help assist in ensuring the accuracy of reporting these contractual dates, without risking employees relying on universal credit.

Leveraging payslip messaging

The CIPP also suggests utilising payslip messaging to inform employees about the NI changes. This approach, proven effective in the 2024 Payslip Statistics Report, not only educates employees but also significantly reduces queries to payroll departments.

Many of Sage Payroll’s communication features, such as payslip messaging and the mobile app align with CIPP’s recommendations for effective communication of NI changes and early payment dates. 

This alignment between tech and best practices is set to play a key role in reducing queries and enhancing compliance.

How Sage Payroll can simplify payroll processing

To save evenings making manual corrections or reprocessing any pay-runs, Sage Payroll can help teams with:

  • Integrated HR support: Tracking employee leave, managing documents electronically, and employee onboarding with custom dashboards.
  • Fast corrections: Making quick corrections without needing to restore data or reprocess data runs, especially when adapting to new NI rates.
  • Full integration with Sage Accounting: Ensuring that salary journals are automatically posted into accounts, providing a complete financial overview and reduce duplication of effort.


As payroll teams navigate the rush before the holiday season and tackle the mid-year NI changes, there are solutions that provide a helping hand with the intensifying workload and ensure that you end 2023 compliant. 

Find out more how Sage Payroll can help you stay compliant with a 4-step digital payroll process with Sage For Accountants today.