National Insurance Contributions (NICs)
A similar principle to that outlined above for income tax thresholds will be followed in respect of many of the NICs thresholds, namely that they are frozen at the limits for the preceding year and will remain at those levels until 2028. Full details are laid out at the end of this publication.
However, the government will uprate the Class 2 and Class 3 NICs rates for 2023/24 to £3.45 per week and £17.45 respectively.National Living Wage (NLW) and National Minimum Wage (NMW)
The government will increase the hourly NLW and NMW from 1 April 2023 as follows:
- £10.42 for those 23 years old and over
- £10.18 for 21-22 year olds
- £7.49 for 18-20 year olds
- £5.28 for 16-17 year olds
- £5.28 apprentice rate for apprentices under 19, and those 19 and over in their first year of apprenticeship.
This represents an increase of over £1,600 to the annual earnings of a full-time worker on the NLW and is expected to benefit over two million workers.
Taxable benefits for company cars for 2023/24
The rates of tax for company cars remain frozen until 2024/25. Future car benefit rates have been announced for 2025/26 to 2027/28:
- For 2025/26, the rates for emissions under 75gm/km increase by 1%.
- For 2026/27, the rates for emissions under 75gm/km increase by a further 1%.
- For 2027/28, the rates for emissions under 75gm/km increase by a further 1%.
The charge for electric cars will rise from 2% to 5% over that period.
For cars with emissions of 75gm/km and above, there will be a 1% rise in 2025/26 only, subject to a maximum of 37%.
From 6 April 2023 the figure used as the basis for calculating the benefit for employees who receive free private fuel from their employers for company cars is increased to £27,800.
For 2023/24 the benefit increases to £3,960 per van and the van fuel benefit charge where fuel is provided for private use increases to £757. If a van cannot in any circumstances emit CO2 by being driven, the cash equivalent is nil.
Reform of the Company Share Option Plan (CSOP)
This reform makes changes to the CSOP, a tax-advantaged employee share scheme available to all UK companies and their employees as follows:
- The employee share options limit will be doubled from £30,000 to £60,000.
- The 'worth having' condition, which limits which types of shares are eligible for inclusion within a CSOP scheme, will be removed.
These changes will have effect for share options granted under CSOP schemes on or after 6 April 2023. Existing options granted before 6 April 2023 will also benefit from these changes.
Enterprise Management Incentives (EMI): improvements to the process to grant options
The measure makes changes to simplify EMI by removing two administrative requirements when companies grant EMI options on or after 6 April 2023. Existing EMI share options granted before 6 April 2023 that have not been excercised will also benefit from the changes.
Firstly, it removes the requirement for the company to set out within the option agreement the details of any restrictions on the shares to be acquired under the option.
Secondly, it removes the requirement for the company to declare that an employee has signed a working time declaration when they issued an EMI option. It does not remove the working time requirement itself.
From 6 April 2024, the government will also extend the deadline for notifying an EMI option from 92 days following the grant to the 6 July following the end of the tax year. This will be legislated separately and the impacts will be set out at that point.