Changes to National Insurance contributions and helping your employees with the cost of living
From 6 July the income threshold for paying National Insurance will rise from £9,880 to £12,570, meaning a lower proportion of people's salaries will be subject to it and 2million people will be exempt from paying all together.
This is estimated to benefit 30 million workers in the UK.
For many, this reverses the 1.25 percent rise to National Insurance, introduced in April, to fund social care in the UK.
Anyone earning less than around £35,000 will see their pay packet return to roughly the same level it was before April.
This is welcome news in a time where the impact of the rising cost of living has dominated headlines, However, there may be other ways to support your employees with increased living costs.
Helping your employees with the cost of living
According to the ONS, the cost of living crisis has seen four out of five people impacted by rising food energy and petrol prices. However, an estimated 46% of employees feel uncomfortable discussing their financial wellbeing.
· Help with benefits
Seven million people in the UK are not claiming benefits they’re entitled to. Many of these are workers are healthy and in work, so they assume they’re not entitled to anything. However, Universal Credit is for people both in and out of work.
These benefits can be worth hundreds of pounds a month. Single parents, families who are renting and have childcare costs, or have someone in the household who is unwell, might also have circumstances that make them eligible to claim. For employees who are struggling, it may be worth exploring these options to alleviate the impact of the cost of living on their personal and professional lives.
· Flexible working
As more and more companies are returning to office-based work instead of working from home, this may impact workers who face a longer commute and increased petrol costs. For many, remote working may be preferred to offsite a rise in utility costs. Therefore, it may be important to offer work flexibility during this period to reduce financial pressure.
· Pay anxiety
According to a YouGov survey, one in five UK workers said that anxiety over poor communication around pay makes them think about looking for a new job. However, 25% of employers said their business can’t keep up with other staff demands due to the time they have to dedicate to payroll processes.
With this in mind, it’s essential that your company adopts the right payroll processes to make sure employees are paid accurately, and on time, so as to alleviate any stresses they may have regarding their financial wellbeing.
This blog post has highlighted the change to National Insurance contributions that come into effect from this week, as well as ways in which companies can support employees facing financial difficulty as a result of the cost of living crisis. As employers, it is worth keeping the channels of communication open to help identify any workers that may be struggling financially, while offering emotional support to those experiencing financial hardship