Looking back at Payroll 2024 

They say time flies when you’re having fun, and as I reflect on the world of payroll last year, January 2024 feels like such a long time ago.

2024 started with a bang, and a mid-year National Insurance (NI) rate change. With a noticeably short turnaround time, the main rate of NI was lowered from 12% to 10% from 6 January. Despite the challenges they faced, as always, payroll professionals pulled out all the stops and got the job done on time. Results of a CIPP Quick Poll, (ow.ly/5j8T50UkMks), showed that out of almost 700 responses, less than 2% of respondents didn’t manage to implement the changes in time.

The conservative government expressed its intention to abolish NI contributions entirely when it was financially possible to do so. So, it was no major surprise that the main rate of NI was reduced again from 10% to 8%. Thankfully, for the sake of payroll professionals’ sanity, this change took effect from the start of the 2024-25 tax year. The new government has a difference in opinion on what’s financially best for the UK economy, so for now at least, there will be no further movement on the NI percentage.

Pay and leave

The latest changes to holiday pay and entitlement came into effect from January 2024, with changes to the calculation methods for part-year workers and irregular-hours workers taking effect on any holiday leave year that starts on or after April 2024.

Paternity leave changes took effect from 6 April, giving partners slightly better flexibility around taking their entitlement of leave and pay. Although the change is a good start heading in the right direction, it still falls short of being a policy fit for a modern-day economy that strives for equality.

Also introduced for the new tax year was an extension to the redundancy protection period for employees on maternity leave and other statutory family leave. The redundancy protected period during pregnancy and maternity starts when an employee tells their employer that they are pregnant and ends 18 months from the date the baby is born.

See here for further information on the changes to employment law covering:

·       flexible working rights

·       carer’s leave

·       pregnancy and family leave

·       paternity leave.

New government pledges

The middle of the year brought a new government into power for the first time in 14 years. Everyone expects a different government to bring different ideas and opinions, but how would the change impact the profession?

A common theme throughout Labour’s manifesto was workers’ rights, and workers having rights from day one of employment in particular. The party pledged to introduce a new Employment Rights Bill within its first 100 days in power.

The private member’s bill to extend the pensions automatic enrolment received royal ascent in September 2023, but all went quiet, until the King’s speech in July last year. It was confirmed that the plan going forward was for the bill to focus on, a value for money framework and small pots consolidation. However, what was not mentioned was the lifetime provider model, or pot for life, which was introduced by the conservative government.

Andrew Blair from the Department for Work and Pensions (DWP), delivered a session on government priorities for pensions, and what that means for payroll, at the CIPP Annual Conference and exhibition in October. Andrew not only highlighted the estimated timing of the various stages proposed, with a plan of the Pension Schemes Bill receiving royal assent around early 2026, but also confirmed that the existing government has no current plans to pursue the Lifetime provider model.

Further developments

On 1 October The Employment (Allocation of Tips) Act 2023, or the "Tips Act" (ow.ly/pM8f50UkJlw), came into force, allowing workers to keep 100% of qualifying tips, while ensuring fairness and transparency. A positive move for the benefit of workers.

2024 has not brought positivity for employers. Beside the prospect of further administrative burden with additional reporting requirements and changing to payrolling benefits, there’s the rising costs associated with payroll. The increase of employers’ NI, the sizable uplift to National Minimum Wage (NMW) and National Living Wage (NLW) for the second year in a row, Statutory Sick Pay (SSP) reform, and improving employees’ rights, there are uncertain times ahead, especially for smaller employers.

However, on the other side it’s quite the opposite fortune for employees. This year has brought a win for workers, whether that be the changes already implemented, new legislation planned for the next tax year, or even further into 2026. Including a NI rate reduction, SSP reform, the Equality Bill, the Employment Rights Bill and Statutory Neonatal Leave and Pay.

What we do know is there is never dull moment in payroll, and last year was no exception. Who’s looking forward to what 2025 brings?