Apprenticeship Levy

Employers and connected companies with a total annual pay bill of more than £3 million, are liable to the Apprenticeship Levy, which is payable monthly. Employers who are not connected to another company or charity will have an annual allowance that reduces the amount of Apprenticeship Levy you have to pay. Apprenticeship Levy is charged at a percentage of your annual pay bill.

Allowance or charge - 2023 to 2024 rate

Apprenticeship Levy allowance – £15,000

Apprenticeship Levy charge – 0.5%

Company & employee vehicles

Advisory rates

Company cars: advisory fuel rates

Use advisory fuel rates to work out mileage costs if you provide company cars to your employees.

These rates apply from 1 March 2023.

Engine size Petrol — amount per mile LPG — amount per mile
1400cc or less 13 pence 10 pence
1401cc to 2000cc 15 pence 11 pence
Over 2000cc 23 pence 17 pence
Engine size Diesel — amount per mile
1600cc or less 13 pence
1601cc to 2000cc 15 pence
Over 2000cc 20 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Advisory electricity rate for fully electric cars

Amount per mile: 9 pence.

Electricity is not a fuel for car fuel benefit purposes.

Employee vehicles: mileage allowance payment

Mileage allowance payments are what you pay your employees for using their own vehicles for business journeys.

You can pay your employees an approved amount of mileage allowance payments each year without having to report them to HMRC. To work out the approved amount, multiply your employee’s business travel miles for the year by the rate per mile for their vehicle.

 

Type of vehicle Rate per business mile 2023 to 2024
Car

For tax purposes: 45 pence for the first 10,000 business miles in a tax year, then 25 pence for each subsequent mile

For National Insurance purposes: 45 pence for all business miles

Motorcycle 24 pence for both tax and National Insurance purposes and for all business miles
Cycle 20 pence for both tax and National Insurance purposes and for all business miles

Employment Allowance

Some businesses and charities can claim Employment Allowance to the value of £5000 against their employers’ Class 1 National Insurance contributions. The below information from the Government website explains who is eligible to claim the allowance. 

“You can claim Employment Allowance if you’re a business or charity (including community amateur sports clubs) and your employers’ Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.

You can also claim if you employ a care or support worker.

If you’re part of a group of charities or companies (also known as connected companies), the total employers’ Class 1 National Insurance liabilities for the group must be less than £100,000.

Only one company in the group can claim the allowance.

If you have more than one payroll

If you have or had more than one employer PAYE reference, the total employers’ Class 1 National Insurance liabilities for your combined payrolls must be less than £100,000 in the previous tax year

You can only claim Employment Allowance against one of the payrolls.

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Check if de minimis state aid rules apply to you

If you make or sell goods or services, Employment Allowance counts as ‘de minimis state aid’. There is a limit to how much de minimis state aid you can get.

You must:

    • Check that you are within the de minimis state aid threshold
    • Work out how much de minimis state aid you have received

You must do this even if you do not make a profit.

You cannot claim if

You cannot claim if you are a public body or business doing more than half your work in the public sector (such as local councils and NHS services) – unless you’re a charity.

You also cannot claim if both of the following apply:

    • You’re a company with only one employee paid above the Class 1 National Insurance secondary threshold
    • The employee is also a director of the company

Certain employees cannot be included in your claim, such as:

    • Someone whose earnings are within IR35 ‘off-payroll working rules’
    • Someone you employ for personal, household or domestic work (like a nanny or gardener) – unless they’re a care or support worker

To find out more about Employment allowance and if you are eligible got to:

National Insurance Thresholds

Class 1A NI: expenses and benefits

You must pay Class 1A National Insurance on work benefits you give to your employees, for example, a company car or private medical insurance . You report and pay Class 1A on expenses and benefits at the end of each tax year.

Class 1A NI: termination awards and sporting testimonial payments

Class 1A National Insurance contributions are due on the amount of termination awards paid to employees which are over £30,000 and on the amount of sporting testimonial payments paid by independent committees which are over £100,000. You report and pay Class 1A on these types of payments during the tax year as part of your payroll.

The National Insurance class 1A rate for 2023 to 2024 is 13.8%

Class 1B NI: PAYE Settlement Agreements (PSAs)

You pay Class 1B National Insurance if you have a PAYE Settlement Agreement. This allows you to make one annual payment to cover all the tax and National Insurance due on small or irregular taxable expenses or benefits for your employees.

The National Insurance class 1B rate for 2023 to 2024 is 13.8%

National Minimum Wage

National Minimum wage is the lowest amount per hour an employer is allowed to pay an employee. At the start of each tax year, the Government adjust the minimum wage in accordance with the cost of living.

In April 2023 employers will see changes to the National Minimum wage and National Living Wage.

As of April 2023, the National Living Wage (NLW) has risen to £10.42. This represents an increase of 92 pence or 9.7 per cent.

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Please ensure

you have reviewed all employees’ hourly rates, guaranteeing those on a fixed annual salary do not fall below these categories.

You may also need to take into consideration any imbalance between employees’ pay rates.

The list of rates is laid out below, with workers in all age brackets eligible for an increase to the minimum amount that they can expect to be paid per hour (2023/24):

The National Living Wage for ages 23 and above £10.42
The National Minimum Wage for 21 to 22-year-olds £10.18
For 18 to 20-year-olds £7.49
For 16–17-year-olds £5.28
For apprentices £5.28

Please note, that we endeavour to assess all your workers as well, but it remains your responsibility to review and approve any increase made in accordance with the NMW/NLW.

For more information go to:

Pay employers’ PAYE

You must pay your PAYE bill to HM Revenue and Customs (HMRC) by:

  • the 22nd of the next tax month if you pay monthly
  • the 22nd after the end of the quarter if you pay quarterly – for example, 22 July for the 6 April to 5 July quarter

If you pay by cheque through the post, it must reach HMRC by the 19th of the month.

You may have to pay interest and penalties if your payment is late. There’s a different way to pay penalties.

Pay online

You’ll need to use your 13-character accounts office reference number as the payment reference. You can find this on either:

  • the letter HMRC sent you when you first registered as an employer
  • the front of your payment booklet or the letter from HMRC that replaced it

You need to add 4 extra numbers to the end of your 13-character accounts office reference number each time you make an early or late payment. If you use this service, it will work out the numbers for you.

As a Payroll Compliance client, we will send you a reminder to pay your PAYE between the 10th-15th of every month, the email will provide you with a P30 report that breaks down the PAYE payment. At the bottom of the report, your accounts office reference and the 4 extra numbers to identify the payment are stated along with HMRC’s bank details.

What you’re paying

Your PAYE bill may include:

You pay your Class 1A National Insurance on work benefits that you give to your employees separately. PAYE Settlement Agreements are also paid separately.

Ways to pay

Make sure you pay HMRC by the deadline. The time you need to allow depends on how you pay.

You can no longer pay at the Post Office.

Same or next day

3 working days

5 working days

If the deadline falls on a weekend or bank holiday, make sure your payment reaches HMRC on the last working day before it (unless you’re paying by Faster Payments using online or telephone banking).

 

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Payment booklets

You’ll need a payment booklet from HMRC to pay at your bank or building society, or by post. If you do not have one, ask HMRC to send it to you. If you’re no longer using your payment booklet, you can ask HMRC to stop sending it.

HMRC will automatically stop sending your payment booklet if you make 2 or more electronic payments in a year.

Statutory Sick Pay (SSP)

The same weekly Statutory Sick Pay rate applies to all employees. However, the amount you must actually pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.

Unrounded daily rates Number of qualifying days in week 1 day to pay 2 days to pay 3 days to pay 4 days to pay 5 days to pay 6 days to pay 7 days to pay
£15.6285 7 £15.63 £31.26 £46.88 £62.52 £78.14 £93.78 £109.40
£18.2333 6 £18.24 £36.47 £54.70 £72.93 £91.17 £109.40
£21.8800 5 £21.88 £43.76 £65.64 £87.52 £109.40
£27.3500 4 £27.35 £54.70 £82.05 £109.40
£36.4666 3 £36.47 £72.94 £109.40
£54.7000 2 £54.70 £109.40
£109.4000 1 £109.40

Statutory Payments

Type of payment or recovery 2023 to 2024 rate
Statutory Maternity Pay — weekly rate for first 6 weeks 90% of the employee’s average weekly earnings
Statutory Maternity Pay — 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 the employee’s average weekly earnings
Statutory Adoption Pay — 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
Statutory Parental Bereavement Pay (SPBP) — weekly rate £172.48 or 90% of the employee’s average weekly earnings, whichever is lower
SMP, SPP, ShPP, SAP or SPBP — 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

Student Loan & Postgraduate Loan Recovery

Rate or threshold 2023 to 2024 rate
Employee earnings threshold for student loan plan 1
  • £22,015 per year
  • £1834.58 per month
  • £423.36 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
  • £403.85 per week
Postgraduate loan deductions  6%

Thresholds, Rates & Codes

The amount of Income Tax you deduct from your employees depends on their tax code and how much of their taxable income is above their Personal Allowance.

     

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    The emergency tax codes from 6 April 2023 are:

    • 1257L W1
    • 1257L M1
    • 1257L X

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