Minimum wage rate updates

From 1st April 2023 you must pay your employees at least minimum wage rates below:

National Living Wage(23+)
21-22 Year Old Rate
18-20 Year Old Rate
16-17 Year Old Rate
Apprentice Rate

£10.42
£10.18
£7.49
£5.28
£5.28

Salaries must also reflect these changes, for example an individual who is 23 and not an apprentice working 40 hours per week will need to have a salary of at least £21,673.60. Please ensure you review your employee’s salaries with this in mind.

Personal Allowance

The personal allowance for the tax year 2023/24 is unchanged so will be £12,570*

*This will reduce by £1 for every £2 earned over £100,000

Tax brackets in England, Wales & Northern Ireland

Tax Rate
Basic rate
Higher rate*
Additional rate

Tax Band Thresholds
£12,571 – £50,270 (£37,700)
£50,271 – £125,140 (£74,870 – £87,440)
£125,140 upwards

Tax rate
20%
40%
45%

The higher rate band will start at £37,700 if you do not have a personal allowance.

Tax brackets in Scotland

Tax Rate
Starter rate
Basic rate
Intermediate rate
Higher rate
Top rate

Tax Band Thresholds
£12,571 – £14,732
£14,733 – £25,688
£25,689 – £43,662
£43,663 – £125,140
Over £125,140

Tax rate
19%
20%
21%
42%
47%

Employment allowance

The employment allowance will remain at £5,000 for the 2023/24 tax year. If the company is entitled to it, you can reduce your employer’s liability for the tax year by up to £5,000.

The rules changed a few years ago so you will need to apply for this again this tax year.

Eligibility

our employer’s national insurance for the previous tax year (2022/23) must not exceed £100,000 (this includes groups and connected companies)
You must have at least one employee or two directors that are earning above the secondary national insurance limit
De minimus state aid rules also apply, for further information regarding this please visit www.gov.uk/claim-employment-allowance/eligibility

Payroll year end

You must submit your final payroll submission for the year before 19^thApril 2023. Some software requires a final year end submission, and some just require you to tick a box to say it’s the final submission for the year before your last payroll submission. Please check with your provider.

Small employer’s relief

You qualify for small employer’s relief if your Total NI for the previous tax year is less than £45,000. If this is the case for your company, please ensure you tick the box stating you are.

Qualifying for this relief means that if you then have any employees go on statutory leave/pay such as Statutory Maternity/Paternity/Adoption pay you will be entitled to reclaim the amounts paid to the employee plus 3% compensation. If you do not qualify you will only be able to claim back 92% of any amounts you pay to them.

Auto enrolment update

There are no changes this year to the auto enrolment rules. Therefore, if you have any employees between the ages of 22 and state pension age, who earn over £10,000 per annum they must be enrolled into the pension scheme. They then have the option to opt out if they wish.

Potential savings for you and your employees – If you are not already using a salary sacrifice scheme it may be worth switching to one for the purpose of auto enrolment. This could save you employers national insurance of £13.80 for every £100 in employees pension and could also save your employees £2.12 per £100 they pay.

Example:

An employee on a salary of £30,000, having pension contributions based on qualifying earnings at the basic rate.

Employer saving: £163.94

Employee saving: £142.56

If you would like to speak to someone regarding this, please get in touch. We work with Independent Financial Planners, Pareto Financial Planning Ltd who may be able to assist with the transition and help you switch the pension type.

P11Ds and payrolling benefits

You will need to complete P11Ds for your employees if you have provided any taxable benefits in the tax year to 5^th April 2023. These are due to be filed before 6^th July 2023.

Payrolled benefits – from the next tax year if you would prefer you can apply for the benefits to be payrolled. This means that instead of potentially under or over paying tax based on a previous year, your employees will pay the correct tax going forward, as it is due. It also means there is no need to complete a P11D for them.

If this is something you are interested in doing, the application must be submitted before 5^th April 2023, so please come back to us before 5^thMarch 2023 in order to give us enough time to prepare an application on your behalf.

If we currently prepare your payroll and P11Ds our fees will be adjusted accordingly. i.e. higher payroll cost but no P11D costs.

Tax Year Update 2023/2024