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What are the payroll tax changes?

by Intuit• Updated 9 months ago

If you haven't been keeping up with the latest tax changes, there's no need to worry. We have all the information you need in this article.

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Investment Zone Employer NICs Relief

Starting from 6 April 2024, QuickBooks Payroll will support the inclusion of 4 new Investment Zone NIC category letters. This update aims to provide NIC relief and help ensure compliance.

Here's a breakdown of each category letter:

Category letterDetails
NStandard category letter.
EMarried women and widows entitled to pay reduced NICs.
KEmployees over the state pension age.
DEmployees who can defer paying 12% NICs and pay only 2% because they're already paying it in another job.

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Income tax rates and thresholds

The amount of Income Tax an individual pays in each tax year, which runs from 6 April to 5 April the following year, depends on how much of their taxable income exceeds their Personal Allowance, and which tax band that excess income falls into.

Select the relevant heading to see the breakdown of tax bands and rates.

Employee personal allowance • £242 per week 
• £1,048 per  month
• £12,570 per year
English and Northern Irish 
PAYE bands and rates		• Basic rate - 20% on annual earnings above the PAYE tax threshold and up to £37,700
• Higher rate - 40% on annual earnings from £37,701 to £125,140
• Additional rate - 45% on annual earnings above £125,141
Employee personal allowance • £242 per week
• £1,048 per month
• £12,570 per year
Scottish PAYE bands and rates• Starter rate - 19% on annual earnings above the PAYE tax threshold and up to £2,306
• Basic rate - 20% on annual earnings from £2,307 to £13,991
• Intermediate rate - 21% on annual earnings from £13,992 to £31,092
• Higher rate - 42% on annual earnings from £31,093 to £62,430
• Advanced rate - 45% on annual earnings from £62,431 to £125,140
• Top rate - 48% on annual earnings above £125,141
Employee personal allowance• £242 per week
• £1,048 per month
• £12,570 per year
Welsh PAYE bands and rates• Basic rate - 20% on annual earnings above the PAYE tax threshold and up to £37,700
• Higher rate - 40% on annual earnings from £37,701 to £125,140 
• Additional rate - 45% on annual earnings above £125,141

You can also find the Income Tax rates and allowances for current and past years on the HMRC website.

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Automatic enrolment earnings thresholds

Here are the annual auto-enrolment thresholds and contributions from April 2024.

  • The auto-enrolment earnings trigger will remain at £10,000.
  • The lower earnings limit of qualifying earnings band will remain at £6,240.
  • The upper earnings limit of qualifying earnings bands will remain at £50,270.

For automatic enrolment contributions:

  • The minimum contribution for employers is 3%.
  • The total minimum contribution (employer and employee) is 8%.

These changes will affect employees who are enrolled in a workplace pension scheme.

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Statutory weekly payments

Here are the new statutory weekly rates, which will take effect in April 2024:

  • Statutory Sick Pay (SSP) will increase from £109.40 to £116.75
  • Statutory Maternity Pay (SMP) will increase from £172.48 to £184.03
  • Statutory Paternity Pay (SPP) will increase from £172.48 to 184.03

To find info about other payment rate changes, refer to the Proposed benefit and pension rates.

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Statutory Paternity Pay (SPP) process

Here are the changes to the SPP process:

  1. Employed parents-to-be who are entitled to SPP will now need to give a notice of 28 days before the desired dates for paternity pay/leave.
  2. An employed parent-to-be who is entitled to SPP can now take Paid Paternal Leave in 2 separate periods of the week each or in a continuous 2-week block within 52 weeks after the birth of their child.

Depending on your payroll subscription, the way you handle SPP will vary. Select the help article that applies to you:

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Student and postgraduate loans

There are a few changes to student and postgraduate loans for the new year. Here's what you need to know. 

  • Plan 1 repayment threshold will increase from £22,015 to £24,990
  • Plan 2 repayment threshold remains the same at £27,295
  • Plan 4 repayment threshold will increase from £27,660 to £31,395 (in Scotland only)
  • Student loan repayment rate remains the same 9%
  • Postgraduate threshold remains at £21,000
  • Postgraduate deduction rate remains at 6%

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Employment Allowance

As an employer, you may be eligible for the Employment Allowance, which can help reduce your annual National Insurance liability by up to £5,000. If you think you might qualify, make sure you specify this in your payroll settings and let HMRC know by sending an EPS (Employer Payment Summary). 

Check if you’re eligible for Employment Allowance on the HMRC website.

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Employer Payment Summary (EPS) and Construction Industry Scheme (CIS) Suffered

If you’re a subcontractor, you can claim back the CIS tax deductions your customers make from their payments to you. All you need to do is send a monthly EPS to HMRC, showing the CIS deductions for the year. 

Make sure you include your Unique Taxpayer Reference (UTR) when claiming CIS deductions, otherwise HMRC may reject the EPS submission.

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