Category

Budget

Rates and Thresholds

Guide to Rates and Thresholds for 2018/19 Tax Year

(to aid employers – not for use for processing payroll)

Tax Rates

Showing each portion of a monthly salary and the tax rate that may be applied to it.
Based on a monthly paid employee with an 1185L tax code and month 1 (not a Scottish tax code)

Rate Monthly Pay
Tax Free Allowance  Up to £987.50
20% £988 – £3 862.50
40% £3 863 – £13 487.50
45% Above £13 489

Based on a monthly paid employee with an 1185L Scottish tax code and month 1

Rate Monthly Pay
Tax Free Allowance Up to £987.50
19% £988 – £1 154.17
20% £1 154.17 – £2 000
21% £2 001 – £3619.17
41% £3 620 – £13 487.50
46% Above £13 489

 

Auto-Enrolment

Monthly
Automatic Enrolment Earnings Trigger £833
Qualifying Earnings £503 – £3863

 

National Insurance

Monthly
Lower Earnings Limit £503
Employee Starts to Pay NI £702
Employer Starts to Pay NI £702
Upper Earnings Limit (employee contributions fall to 2%) £3863

 

National Minimum Wage

Hourly Rate
National Living Wage (over 25) £7.83
Aged 21 – 24 £7.38
Aged 18 – 20 £5.90
Aged 16 – 17 £4.20
Apprentice Rate £3.70

 

Statutory Payments

Weekly
Sick Pay £92.05
Maternity Pay (weeks 7 – 39) £145.18

 

The above rates are a guide only and subject to change and interpretation.  Please visit HMRC for up to date information.

 

Download a PDF version here

Budget 2016

Salary Sacrifice
Tax Allowances
Termination Payments
Employment Intermediaries
Dividend Tax
Other notices

There were several announcements made in Budget 2016, including rates for April 2017.  Many of the more interesting items were not directly relating to payroll.

Salary Sacrifice was mentioned as predicted, but no immediate changes announced.  Pensions, Child Care and Cycle to Work schemes seem likely to continue to attract relief, but other schemes may be limited or stopped.

The tax allowances will remain as published.  What we did not previously include was that the higher rate limit will be raised to £43000 in April, from the current £42385.  The national insurance rates will also be the same as previously published.  For further details see here.

Termination payments are complicated, and with how they are dealt with for tax and National Insurance.  The government previously announced this was something they were looking at and now the first changes have been announced.  From April 2018 payments over £30000 will be subject to National Insurance as well as income tax.  There is also a further technical consultation planned.

Employment intermediaries are being challenged with changes in the tax relief for travel and subsistence.  Tax relief for home to work travel, and subsistence expenses, for workers engaged through an employment intermediary is to be removed from April.  This will bring them into line with employees, and may affect those employed by umbrella companies, personal service companies or recruitment agencies.

Dividend taxes are also changing, which will affect company directors.  Dividend Tax Credit is being abolished, and replaced with a £5000 a year Dividends Allowance.  Tax will be due on dividend income above the allowance at 7.5% for basic rate, 32.5% for higher rate, and 38.1% for additional rate tax payers.

Do not hire illegal workers, apart from the fines the government will also remove a year’s employment allowance.  This measure is planned to start in 2018.

The employment allowance is raising to £3000 per year this April, as we previously reported, but the rules are changing slightly with which companies are eligible.  Where a director is the sole employee, that company will no longer be eligible.  Guidance notes were expected this month.

The Minimum Wage will change in October 2016, which is as expected, with the rate for 21-24 year olds moving to £6.95 per hour.  What is a little more interesting is that the Minimum Wage and Living Wage cycles are to be brought into line, and both rates will be amended together from April 2017.

The statutory payments are not changing this April which is quite unusual.  So SMP, SSP rates etc will remain the same.  For more information on rates and thresholds see here.

Budget 2016, as with everything the Devil is in the Detail.