Payroll Updates for 2024-2025 Tax Year
March 19, 2024
Read our latest payroll update, which outlines key changes that HMRC will implement from the start of the new tax year in April 2024. If you have any questions, please do get in touch with the RA Accountants’ payroll specialists to find out more.
PAYE Tax
The standard employee personal allowance for the 2024 to 2025 tax year is:
£242 per week
£1,048 per month
£12,570 per year
For England, Wales, and Northern Ireland
| PAYE tax rate | Rate of tax | Annual earnings the rate applies to (above the PAYE threshold) |
| Basic tax rate |
20% |
Up to £37,700 |
| Higher tax rate |
40% |
From £37,701 to £125,140 |
| Additional tax rate |
45% |
Above £125,140 |
For Scotland
| PAYE tax rate | Rate of tax | Annual earnings the rate applies to (above the PAYE threshold) |
| Starter tax rate |
19% |
Up to £2,306 |
| Basic tax rate |
20% |
From £2,307 to £13,911 |
| Intermediate tax rate |
21% |
From £13,992 to £62,430 |
| Higher tax rate |
42% |
From £62,431 to £125,140 |
| Top tax rate |
47% |
Above £125,140 |
Emergency Tax codes
1257L W1
1257L M1
1257L X
Changes to the National Minimum Wage
| National Minimum Wage changes | |||
| NMW Rate |
Annual Increase (£) |
Annual Increase (%) |
|
| National Living Wage (for those aged 21 and over)
|
£11.44 |
1.02 |
9.8 |
| 21-22 Year Old Rate
|
See NLW |
1.26 |
12.4 |
| 18-20 Year Old Rate
|
£8.60 |
1.11 |
14.8 |
| 16-17 Year Old Rate
|
£6.40 |
1.12 |
21.2 |
| Apprentice Rate
|
£6.40 |
1.12 |
21.2 |
| Accommodation Offset
|
£9.99 |
0.89 |
9.8 |
The key change to note with the above is that the government have decided to lower the age threshold for the national minimum wage to aged 21 and over from 6th April 2024.
Statutory Payments
Statutory Payments such as: Maternity, paternity, adoption, shared parental, and parental bereavement pay will increase to £184.03 from the 6th of April 2024.
- Maternity allowance will increase from £172.48 to £184.03.
- Statutory sick pay will increase from £109.40 to £116.75 per week from 6th April 2024.
National Insurance
The Class 1 national insurance rate changed from January in the 2023-2024 tax year, from 12% to 10%, with the ultimate rates being set as such for all employees and employers for tax year commencing 6th April 2024:
- The Primary Threshold (Employees) will be set at £12,570 per annum, keeping it in line with the income tax threshold, this sets that all employees will benefit of £1,048 per month free of NI charges, after which they will be charged at 8% (this has decreased by another 2%) for each amount over £1,048 till £4,189 per month.
- The secondary Threshold (Employers) will be set at £9,100 per annum, this means that employers will pay 13.8% on any amount that employees will earn over £758 a month, once the employer has made payments that exceed £9,100.
The below tables illustrate the national insurance threshold limits and rates for the new tax year 2024-25.
| National Insurance Threshold 2024-2025 | Monthly Threshold | Annual Threshold |
| Lower earnings limit (LEL) |
£533 |
£6396 |
| Primary threshold (PT) |
£1,048 |
£12,570 |
| Secondary threshold (ST) |
£758 |
£9,100 |
| Upper earnings limit (UEL) |
£4,189 |
£50,270 |
| Upper secondary threshold (UST) |
£4,189 |
£50,270 |
| Apprentice upper secondary threshold (AUST) |
£4,189 |
£50,270 |
| Veterans’ upper secondary threshold (VUST) |
£4,189 |
£50,270 |
| Freeport upper secondary threshold (FUST) |
£2,083 |
£25,000 |
| National Insurance Rates 2024-2025 | LEL to PT | PT to UEL | Above UEL |
| A |
0% |
8% |
2% |
| B |
0% |
1.85% |
2% |
| C |
Nil |
Nil |
Nil |
| F (Freeport) |
0% |
8% |
2% |
| H (Apprentice under 25) |
0% |
8% |
2% |
| I (Freeport – married women / widows) |
0% |
1.85% |
2% |
| J |
0% |
2% |
2% |
| L (Freeport – deferment) |
0% |
2% |
2% |
| M (Under 21) |
0% |
8% |
2% |
| S (Freeport – State pensioner) |
Nil |
Nil |
Nil |
| V (Veteran) |
0% |
8% |
2% |
| Z (Under 21 – deferment) |
0% |
2% |
2% |
Pension
The below table illustrates the thresholds at which an employee will be automatically enrolled into pension.
|
Table 1 – Current and proposed automatic enrolment thresholds (annual) |
|||
| Trigger | Lower limit qualifying earnings band | Upper limit qualifying earnings band | |
| Current (2023/24) |
£10,000 |
£6,240 |
£50,270 |
| Proposed (2024/25) |
£10,000 |
£6,240 |
£50,270 |
Employment Allowance
Employment allowance allows eligible employers to reduce their annual national insurance liability by up to the annual allowance amount. The annual employment allowance available for tax year 2024-25 is £500.
Company Car tax rates
As per 2023’s Autumn statement, company car tax rates are set to increase in two years’ time.
So, while that means no changes for this year, businesses should expect these rates to go up by 1% for all bands in the 2025/2026 tax year, and then another 1% in 2026/2027 and 2027/2028.
Get in touch with the RA Accountants’ Payroll Team to discuss the payroll update 2024-2025
If you have any questions about this payroll update, the changes announced in the Spring Budget and how it could affect your payroll, please do get in touch with our team of payroll specialists. They can talk you through the impact of these recent changes and any other issues to ensure the smooth running of your payroll.
This article is for guidance only and professional advice should be obtained before acting on any information contained in them.
No responsibility can be accepted for loss occasioned howsoever to any person as a result of action taken or refrained from as a result of reading.
