New for 2024-25
There are a number of changes to the rules and rates that will affect payroll for 2024-25 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 2024-25 which gives details of National Insurance rates and thresholds, minimum wage rates, etc.
Please note that the rates and thresholds listed below include changes announced in the Spring Budget of 6 March 2024. An automatic software update issued on 11 March 2024 will implement these changes in Payroll Manager for the tax year 2024-25.
- Employee Tax codes for 2024-25
- Income tax rates and thresholds in England, Northern Ireland, Wales and Scotland
- National Insurance Contributions
- 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
- Paternity Pay changes
- New Holiday Pay legislation for Irregularly paid / part year workers
1. Employee Tax codes for 2024-25
HMRC have announced that there will be NO uplifts of tax codes for tax year 2024-25. The ‘standard/emergency’ tax code for 2024-25 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 2024-25
The table below shows the income tax rates and thresholds in use for England, Wales and Northern Ireland.
| 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. A new ‘Advanced‘ rate of tax of 45% has been introduced, and the ‘Top‘ rate of tax has been increased to 48% from 6 April 2024
| 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 £75,000 |
| Scottish Advanced rate | 45% | On earnings £75,001 to £125,140** |
| Scottish Top rate | 48% | On earnings above £125,140 |
| (*Assumes individuals are in receipt of the standard Personal Allowance. ** Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000) | ||
A full list of Tax rates and thresholds can be found at Rates and thresholds for employers 2024 to 2025 – 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 2024-25.
| 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 2024.
The Chancellor announced in the Spring Budget that the primary rate of employee’s NIC will be 8% from 6 April 2024 (a reduction from the 10% figure which was in place in March 2024)
A full list of NIC rates can be found at Rates and thresholds for employers 2024 to 2025
Payroll Manager will automatically apply the correct NIC bands and rates.
4. Auto Enrolment Pensions – Qualifying Earnings thresholds
The 2024-25 Auto Enrolment Qualifying Earnings thresholds remain unchanged.
The Lower level of Qualifying Earnings remains at £120 per week / £520 per month for 2024-25
The Upper level of Qualifying Earnings remains at £967 per week / £4,189 per month for 2024-25
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 2024-25, 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
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- The rate for Statutory Sick Pay (SSP) is £116.75 per week from April 2024 (the weekly rate was £109.40 in 2023-24).
- The standard rate of Statutory Maternity, Paternity, Adoption Pay, Shared Parental Pay, and Parental Bereavement Pay (SMP, SPP, SAP, ShPP, SPBP) is £184.03 from April 2024 (the weekly rate was £172.48 in 2023-24).
- The Lower Earnings Limit (LEL) for 2024-25 (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 2023-24)
See the HMRC publication Rates and Thresholds for 2024-25 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 2024. The new hourly rates, applicable from 1 April 2024 are as follows:
- Aged 21 and above (national living wage rate) – £11.44
- Aged 18 to 20 inclusive – £8.60
- Aged under 18 (but above compulsory school leaving age) – £6.40
- Apprentices aged under 19 – £6.40
- Apprentices aged 19 and over, but within the first year of their apprenticeship – £6.40
If you have employees that are subject to these minimums you should ensure that the correct rate is being paid from April 2024 onwards. Payroll Manager has a number of features to help with this – please see Minimum Wage and National Living Wage – Moneysoft
More information can be found on the link below:
National Minimum wage and Living wage rates
ACAS guide – when minimum wage increases apply
Minimum Wage and National Living Wage – Moneysoft
7. Student loan rates and thresholds – Plan 1, Plan 2, Plan 4 (Scotland) and Postgraduate loans.
From 6 April 2024 the threshold at which borrowers repay Student Loan Plan Type 1 loans will increase from £22,015 to £24,990 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 £27,660 to £31,395 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 2024-25 (i.e the same level as 2023-24).
9. Paternity Pay changes
In previous tax years, an employee taking Statutory Paternity Leave could choose to take either 1 or 2 consecutive weeks of leave, and be paid either 1 or 2 weeks of SPP. From April 2024 onwards there is no requirement for these weeks to be consecutive, and an employee is able to take up to 2 separate weeks of leave. See Statutory Paternity Pay (SPP) – Moneysoft for more details.
10. New Holiday Pay legislation for Irregularly paid / part year workers
The Government has made changes to the Working Time Regulations relating to holiday entitlement and holiday pay calculations for ‘Irregular Hours’ and ‘Part-Year’ workers, which apply to holiday leave years from 1 April 2024. These changes mean that employers with these types of employees have a choice of 2 methods to use to calculate holiday leave and pay, including ‘Rolled-up Holiday Pay’. See Holiday Pay for irregular hours and part-year workers – Moneysoft for more details.
Links
GOV.UK – Rates and Thresholds for 2024-25