Welcome to our latest blog post on the crucial updates to payroll information for the upcoming tax year of 2023/2024. At Eternal Engagements, we understand the complexities and challenges of managing payroll, and that’s why we use the certified Sage business cloud payroll software combined with our team of experts. It allows us to stay ahead of the game and avoid common payroll mistakes, such as failing to update minimum wages or tax codes, which can lead to incorrect employee pay and inaccurate pension rates. In this blog, we’ll provide you with the latest updates and insights to ensure you stay compliant and up to date with your payroll responsibilities.
PAYE tax rates and thresholds
| PAYE tax rates and thresholds | 2023 to 2024 |
| Employee personal allowance | £242 per week £1,048 per month £12,570 per year |
| basic tax rate | 20% on annual earnings above the PAYE tax threshold and up to £37,700 |
| higher tax rate | 40% on annual earnings from £37,701 to £125,140 |
| additional tax rate | 45% on annual earnings above £125,140 |
NI Thresholds
| Class 1 National Insurance thresholds | 2023 to 2024 |
| LEL | £123 per week
£533 per month £6,396 per year |
| Primary threshold | £242 per week £1,048 per month £12,570 per yearDirectors For the whole tax year:£229 per week £11,908 per year |
| Secondary Threshold (ST) | £175 per week
£758 per month £9,100 per year |
| Upper Secondary Threshold (under 21) (UST) | £967 per week
£4,189 per month £50,270 per year |
| Apprentice Upper Secondary Threshold (apprentice under 25) (AUST) | £967 per week
£4,189 per month £50,270 per year |
| Upper Earnings Limit (UEL) | £967 per week
£4,189 per month £50,270 per year |
Minimum wage rates
NB: Minimum Wage increase from 1st April 2023 as follows:
Apprentice Rate £5.28
Aged under 18 £5.28
18-20-Year-Old £7.49
Adult Rate (21-22) £10.18
Living Wage (23 +) £10.42
Statutory Maternity, Paternity, Adoption and Shared Parental Pay
| Type of payment or recovery | 2023 to 2024 rate |
| SMP – weekly rate for first 6 weeks | 90% of the employee’s average weekly earnings |
| SMP – weekly rate for remaining weeks | £172.48 or 90% of the employee’s average weekly earnings, whichever is lower |
| Statutory Paternity Pay (SPP) – weekly rate | £172.48 or 90% of the employee’s average weekly earnings, whichever is lower |
| Statutory Adoption Pay (SAP) – weekly rate for first 6 weeks | 90% of employee’s average weekly earnings |
| SAP – weekly rate for remaining weeks | £172.48 or 90% of the employee’s average weekly earnings, whichever is lower |
| Statutory Shared Parental Pay (ShPP) – weekly rate | £172.48 or 90% of the employee’s average weekly earnings, whichever is lower |
| SMP/SPP/ShPP/SAP – proportion of your payments you can recover from HMRC | 92% if your total Class 1 National Insurance (both employee and employer contributions) is above £45,000 for the previous tax year
103% if your total Class 1 National Insurance for the previous tax year is £45,000 or lower |
Sick Pay
Statutory Sick pay has increased to £109.40 per week
Student Loan and Postgraduate loan
In addition to student loan recovery, we now have post-graduate loan recovery, which will be deducted via payroll. It will be shown on new starter forms.
| Rate or threshold | 2023 to 2024 rate |
| Employee earnings threshold for student loan plan 1 | £22,015 per year £1,834.58 per month £423.37 per week |
| Employee earnings threshold for student loan plan 2 | £27,295 per year £2,274.58 per month £524.90 per week |
| Employee earnings threshold for student loan plan 4 | £27,660 per year £2,305 per month £531.92 per week |
| Student loan deductions | 9% |
| Employee earnings threshold for postgraduate loan | £21,000 per year £1,750.00 per month £403.84 per week |
| Postgraduate loan deductions | 6% |
Class 1 National Insurance rates
Employee (primary) contribution rates
Deduct primary contributions (employee’s National Insurance) from your employees’ pay through PAYE.
| National Insurance category letter | Earnings at or above lower earnings limit up to and including primary threshold | Earnings above the primary threshold up to and including upper earnings limit | Balance of earnings above upper earnings limit |
| A | 0% | 12% | 2% |
| B | 0% | 5.85% | 2% |
| C | nil | nil | nil |
| H (apprentice under 25) | 0% | 12% | 2% |
| M (under 21) | 0% | 12% | 2% |
Employer (secondary) contribution rates
You pay secondary contributions (employer’s National Insurance) to HMRC as part of your PAYE bill.
Pay employers’ PAYE tax and National Insurance.
| National Insurance category letter | Earnings at or above lower earnings limit up to and including secondary threshold | Earnings above secondary threshold up to and including Freeport upper secondary threshold | Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans | Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans |
| A | 0% | 13.8% | 13.8% | 13.8% |
| B | 0% | 13.8% | 13.8% | 13.8% |
| C | 0% | 13.8% | 13.8% | 13.8% |
| H (apprentice under 25) | 0% | 0% | 0% | 13.8% |
| M (under 21) | 0% | 0% | 0% | 13.8% |
Employment Allowance
Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount.
| Allowance | 2023 to 2024 rate |
| Employment Allowance | £5,000 |