Payroll Update for the 2023/24 Tax Year
March 22, 2023
As the end of the financial year 2022/2023 is rapidly approaching, we have gathered a list of key changes that will come into force at the start of the new tax year 2023/2024. If you have any questions about any changes in this Payroll Update that might affect you, please do get in touch with the Payroll Team at RA Accountants – we would be very pleased to hear from you.
PAYE Tax
The standard employee personal allowance for the 2023 to 2024 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 £2,162 |
| Basic tax rate | 20% | From £2,163 to £13,118 |
| Intermediate tax rate | 21% | From £13,119 to £31,092 |
| Higher tax rate | 42% | From £31,093 to £125,140 |
| Top tax rate | 47% | Above £125,140 |
Emergency Tax codes
- 1257L W1
- 1257L M1
- 1257L X
National Minimum Wage changes
| Rate from April 2023 |
Current rate (April 2022- March 2023) |
% Increase |
|
|---|---|---|---|
| National Living Wage | £10.42 | £9.50 | 9.7% |
| 21 – 22 Year Old Rate | £10.18 | £9.18 | 10.9% |
| 18 – 20 Year Old Rate | £7.49 | £6.83 | 9.7% |
| 16 – 17 Year Old Rate | £5.28 | £4.81 | 9.7% |
| Apprentice Rate | £5.28 | £4.81 | 9.7% |
| Accommodation Offset | £9.10 | £8.70 | 4.6& |
Statutory Payments
- Statutory Payments such: Maternity, paternity, adoption, shared parental and parental bereavement pay will increase to £172.48 from the 2nd of April 2023.
- Maternity allowance will increase from £156.66 to £172.48.
- Statutory sick pay will increase from £99.35 to £109.40 per week from 6th April 2023.
National Insurance
The national insurance rates have changed not one, not two but three times throughout the 2022-2023 tax year, with the ultimate rates being set as such for all employees and employers for 2023/24 tax year:
- 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 12% 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.
| National Insurance threshold | Monthly threshold | Annual threshold |
|---|---|---|
| Lower earnings limit (LEL) | £533 | £6396 |
| Primary threshold (PT) | £1048 | £12,570 |
| Secondary threshold (ST) | £758 | £9100 |
| Upper earnings limit (UEL) | £4189 | £50,270 |
| Upper secondary threshold (UST) | £4189 | £50,270 |
| Apprentice upper secondary threshold (AUST) | £4189 | £50,270 |
| Veterans upper secondary threshold (VUST) | £4189 | £50,270 |
| Freeport upper secondary threshold (FUST) | £2083 | £25,000 |
| National Insurance Rates | LEL to PT | PT to LEL | Above UEL |
|---|---|---|---|
| A | O% | 12% | 2% |
| B | O% | 5.85% | 2% |
| C | O% | O% | 0% |
| F (Freeport) | O% | 12% | 2% |
| H ( apprentice under 25) | O% | 12% | 2% |
| I (Freeport – married women / widows) | O% | 5.85% | 2% |
| J | O% | 2% | 2% |
| L (Freeport – deferment) | O% | 2% | 2% |
| M (under 21) | O% | 12% | 2% |
| S (Freeport – state pensioner) | O% | 0% | 0% |
| V (verteran) | O% | 12% | 2% |
| Z (under 21 -deferment) | O% | 2% | 2% |
Pensions
The below table illustrates the thresholds at which an employee will be automatically enrolled into pension.
Current and proposed automatic enrolment thresholds (annual)
| Trigger | Lower limit qualifying earnings band |
Upper limit qualifying earnings band |
|
|---|---|---|---|
| Current (2022/23) | £10,000 | £6,240 | £50,270 |
| Proposed (2023/24) | £10,000 | £6,240 | £50,270 |
Company Car tax rates
As per 2022’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 RA Accountants’ Payroll team
If you would like to find out more about our payroll service or have any queries about how the changes outlined in this Payroll Update could affect your payroll, please feel free to get in touch the RA Accountants’ Payroll team – we would be very pleased to hear from you.
And don’t forget to download a copy of our 2023 Spring Budget Summary
The 2023 Spring Budget has brought in a number of changes – take a look at our Budget Summary to find out more. If you have any questions about how the Spring Budget could affect you and your business do get in touch.
Disclaimer;
The information provided on this web site is of a general nature. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from a professional accountant before you take any action or refrain from action. Whilst we endeavour to use reasonable efforts to furnish accurate, complete, reliable, error free and up-to-date information, we do not warrant that it is such. We and our associates disclaim all warranties. The information can only provide an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice.
