Payroll Tax Year Changes 2023/24
Change is afoot in relation to rates and thresholds for tax, NI, sick pay and other important elements of your payroll. Our expert NICOLA CANTRILL guides you through the figures for the new tax year.
Each year, starting on 6th April, new government payroll changes come into effect.
Below we have highlighted the main changes that affect individuals and businesses for the year 2023/24.
Personal Tax Allowance and Tax bands
The standard tax code has not changed and will stay at 1257L.
Personal allowance (paid before deductions) will be as follows:
- £242 per week
- £1048 per month
- £12570 per year
Tax bands will also stay the same, except the additional rate band, which has been lowered. The table below shows details of the rate at which tax will be deducted and the annual earnings on which the rate will apply.
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PAYE tax rate
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Rate of tax
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Annual earnings the rate applies to (above the PAYE threshold)
|
|
Basic tax rate
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20%
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Up to £37,700
|
|
Higher tax rate
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40%
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From £37,701 to £125,140
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|
Additional tax rate
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45%
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Above £125,140
|
National Insurance bands and rates
National insurance thresholds and rates have not changed from the last tax year and stay frozen for year 2023/24.
See the table below, which shows Class 1 national insurance thresholds.
Note: these are just the main national insurance thresholds. Others are listed in the link at the end of the article.
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Class 1 National Insurance thresholds
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2023 to 2024
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|
Lower earnings limit
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£123 per week
|
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£533 per month
|
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£6,396 per year
|
|
Primary threshold
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£242 per week
|
|
£1,048 per month
|
|
£12,570 per year
|
|
Secondary threshold
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£175 per week
|
|
£758 per month
|
|
£9,100 per year
|
|
Upper earnings limit
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£967 per week
|
|
£4,189 per month
|
|
£50,270 per year
|
The percentage at which NI will be deducted has also not changed and is as follows:
Employee NI is deducted at 12% when they reach a payment over the primary threshold.
An employer pays NI at 13.8% when an employee reaches a payment over the secondary threshold.
Note: there are many different NI category letters which will be deducted at different percentages. Letter A is the main one, which relates to the percentages quoted above. Please use the link at the end of the article for more information on NI category letters.
Employment Allowance
If you are an eligible employer, employment allowance reduces your national insurance liability. The annual amount for 2023/24 is £5,000.
There is more information on this in the link at the end of the article.
National Minimum Wage Rates
This is the minimum pay per hour almost all workers are entitled to by law.
The rates for the new year will be as follows:
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Category of worker
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Hourly rate
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Aged 23 and above (national living wage rate)
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£10.42
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Aged 21 to 22 inclusive
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£10.18
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Aged 18 to 20 inclusive
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£7.49
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|
Aged under 18 (but above compulsory school leaving age)
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£5.28
|
|
Apprentices aged under 19
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£5.28
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Apprentices aged 19 and over, but in the first year of their apprenticeship
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£5.28
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Auto Enrolment
The rates and percentages for pension deductions have also not changed from the last tax year and will stay frozen.
Once an employee is auto enrolled, a total of 8% (including tax relief) is deducted on relevant earnings. The employer must pay at least 3% of this.
Please see relevant earning triggers below:
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Annual
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Weekly
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Monthly
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Lower level of qualifying earnings
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£6,240
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£120
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£520
|
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Earnings trigger for automatic enrolment
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£10,000
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£192
|
£833
|
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Upper level of qualifying earnings
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£50,270
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£967
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£4,189
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More information on auto enrolment and pensions can be found here: Workplace pensions law - auto enrolment | The Pensions Regulator
Statutory Rates
Sick pay and parental pay have gone up for tax year 2023/24. You must pay any entitled employee Statutory Sick Pay (SSP) of £109.40 per week.
Statutory Maternity (SMP), Paternity (SPP), Adoption (SAP) and Shared Parental Pay (ShPP) are as follows:
SMP/SAP
- 90% of the employee's average weekly earnings for the first six weeks.
- £172.48 per week or 90% of the employee's average weekly earnings, whichever is lower for the remaining weeks of leave.
SPP/ShPP
- £172.48 per week or 90% of the employee's average weekly earnings, whichever is lower for the remaining weeks of leave.
More information on statutory rates will be found in the below link along with the other additional information we've referred to.
Rates and thresholds for employers 2023 to 2024 - GOV.UK (www.gov.uk)
If you're looking for advice on any of the changes, don't hesitate to call Page Kirk on 0115 955 5500 or email enquiries@pagekirk.co.uk.
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