New for 2023-24
There are a number of changes to the rules and rates that will affect payroll for 2023-24 and this guide provides details of some of them. Payroll Manager is automatically updated to include each of these changes. We would recommend that you read the latest editions of HMRC Employer Bulletin (www.hmrc.gov.uk/payerti/forms-updates/employer-bulletin/index.htm ) which cover many of these items in greater detail. Please also see the GOV.UK document Rates and thresholds for employers 2023-24 which gives details of National Insurance rates and thresholds, minimum wage rates, etc.
- Employee Tax codes for 2023-24
- Income tax rates and thresholds in England, Northern Ireland, Wales and Scotland
- National Insurance bands and rates
- Auto Enrolment Pensions – Qualifying Earnings thresholds
- New rates of Statutory Pay
- National Minimum wage increases
- Student Loan rates and thresholds – Plan 1, Plan 2, Plan 4 (Scotland) and Postgraduate Loans
- Employment Allowance
1. Employee Tax codes for 2023-24
HMRC have announced that there will be NO uplifts of tax codes for tax year 2023-24. The ‘standard/emergency’ tax code for 2023-24 remains at 1257L. (S1257L in Scotland, C1257L in Wales).
The HMRC help sheet www.hmrc.gov.uk/helpsheets/p9x.pdf gives further guidance on Tax Codes.
2. Income tax rates and thresholds for 2023-24
The table below shows the income tax rates and thresholds in use for England, Wales and Northern Ireland. The threshold at which the additional rate (45%) applies is £125,140 from 6 April 2023 (the threshold was £150,000 in 2022-23)
| Income tax rates for England, Wales & Northern Ireland (annual earnings) | ||
| Basic rate | 20% | On earnings £12,570 to £50,270 |
| Higher rate | 40% | On earnings £50,271 to £125,140 |
| Additional rate | 45% | On earnings above £125,140 |
| (Rates assume a personal allowance of £12,570) | ||
The table below shows the income tax rates and thresholds in use for Scotland. The Higher Rate and Top Rates of tax have been increased by 1% point each, and threshold at which the Top Rate applies is £125,140 from 6 April 2023
| Income tax rates for Scotland (annual earnings) | ||
| Scottish Starter rate | 19% | On earnings £12,571 to £14,732 |
| Scottish Basic rate | 20% | On earnings £14,733 to £25,688 |
| Scottish Intermediate rate | 21% | On earnings £25,689 to £43,662 |
| Scottish Higher rate | 42% | On earnings £43,663 to £125,140 |
| Scottish Top rate | 47% | On earnings above £125,140 |
| (Rates assume a personal allowance of £12,570) | ||
A full list of Tax rates and thresholds can be found at Rates and thresholds for employers 2023 to 2024 – GOV.UK (www.gov.uk)
Payroll Manager will automatically apply the correct rate/ threshold for income tax according to the tax code assigned to each employee.
3. National Insurance Contributions
The table below shows the National Insurance bands for 2023-24.
| Lower Earnings Limit (LEL) | Primary Threshold (PT) | Secondary Threshold (ST) for Employer NIC | Upper Earnings Limited (UEL) | |
| Weekly | 123 | 242 | 175 | 967 |
| 2-Weekly | 246 | 484 | 350 | 1,934 |
| 4-Weekly | 492 | 967 | 700 | 3,867 |
| Monthly | 533 | 1,048 | 758 | 4,189 |
| Directors Annual | 6,396 | 12,570 | 9,100 | 50,270 |
For directors using the Standard Annual Earnings Period method of calculating NIC, the Annual Primary Threshold is £12,570, effective from 6 April 2023.
A full list of NIC rates can be found at Rates and thresholds for employers 2023 to 2024
Payroll Manager will automatically apply the correct NIC bands and rates.
4. Auto Enrolment Pensions – Qualifying Earnings thresholds
The 2023-24 Auto Enrolment Qualifying Earnings thresholds remain unchanged.
The Lower level of Qualifying Earnings remains at £120 per week / £520 per month for 2023-24
The Upper level of Qualifying Earnings remains at £967 per week / £4,189 per month for 2023-24
The ‘trigger point’ (where employees need to be automatically enrolled) remains at £10,000 per year.
The minimum contribution percentages relating to Automatic Enrolment pension schemes have not changed for 2023-24, and remain at 5% for the employee and 3% for the employer.
Payroll Manager will automatically apply these thresholds.
5. New rates of Statutory Pay
-
- The rate for Statutory Sick Pay (SSP) is £109.40 per week from April 2023 (the weekly rate was £99.35 in 2022-23).
- The standard rate of Statutory Maternity, Paternity, Adoption Pay, Shared Parental Pay, and Parental Bereavement Pay (SMP, SPP, SAP, ShPP, SPBP) is £172.48 from April 2023 (the weekly rate was £156.66 in 2022-23).
- The Lower Earnings Limit (LEL) for 2023-24 (i.e. the minimum amount an employee must earn in order to qualify for SSP, SMP etc) remains at £123.00 (the LEL was £123.00 in 2022-23)
See the HMRC publication Rates and Thresholds for 2023-24 for more information.
Payroll Manager will automatically apply the correct rate of statutory pay.
6. National Minimum Wage increases.
The National Minimum wage rates are increasing from April 2023. The new hourly rates, applicable from 1 April 2023 are as follows:
- Aged 23 and above (national living wage rate) – £10.42
- Aged 21 to 22 inclusive – £10.18
- Aged 18 to 20 inclusive – £7.49
- Aged under 18 (but above compulsory school leaving age) – £5.28
- Apprentices aged under 19 – £5.28
- Apprentices aged 19 and over, but within the first year of their apprenticeship – £5.28
Payroll Manager cannot automatically check that you are paying the minimum required amounts, so if you have employees that are subject to these minimums you should ensure that the correct rate is being paid from April 2023 onwards. More information can be found on the link below:
National Minimum wage and Living wage rates
ACAS guide – when minimum wage increases apply
Payroll Manager – help with monitoring employees ages
7. Student loan rates and thresholds – Plan 1, Plan 2, Plan 4 (Scotland) and Postgraduate loans.
From 6 April 2023 the threshold at which borrowers repay Student Loan Plan Type 1 loans will increase from £20,195 to £22,015 per year – Type 1 loans are those issued to students before 2012. The rate remains at 9%.
The threshold for Student Loan Plan Type 2 loans (issued after 2012) remains at £27,295 per year. The rate remains at 9%.
The threshold for Student Loan Plan Type 4 loans (Scotland) increases from £25,375 to £27,660 per year. The rate remains at 9%.
The threshold for Postgraduate Loans (PGL), remains at £21,000 per year, and the rate remains at 6%.
Payroll Manager will automatically apply the correct student loan repayment threshold and will include the correct plan type in the RTI details sent to HMRC.
Please see our guide on Student Loan Deductions for details of how to process student loan repayments in the software.
For more information please refer to the HMRC guide on Repaying your student loan
8. Employment Allowance
The Employment Allowance remains at £5000 in 2023-24 (i.e the same level as 2022-23).
Links
GOV.UK – Rates and Thresholds for 2023-24