Tax year 2023-24 changes?

1014. Tax year 2023-24 changes?

HMRC's new tax year starts only on 6th April of every year. However the option to start the new tax year in our service is available after 31st March. Our system will be automatically updated and fully compliant with the legislative changes from the start of the new tax year.

When moving to new tax year 2023-24, please take a note of the following changes below :-

1) Global Tax Code set to 1257L
2) Income Tax Rates and Bandwidth
3) Auto Enrolment Minimum Contribution Rates
4) Statutory Payment Rates
5) Student Loan Rates
6) Postgraduate Loan Deductions
7) Company Car Fuel Rates
8) National Minimum Wage
9) National Insurance contributions
10) Termination awards and sporting testimonial payments
11) Employment Allowance
12) National Insurance contributions relief for employers who hire armed forces veterans
13) Full Payment Submission (YTD FPS) in place of Earlier Year Update (EYU)
14) Off payroll working in private sector
15) Employer Payment Summary (EPS)

1) Global Tax Code set to 1257L

Employee Personal allowance will be £12,570 for the tax year 2023-24.

Tax Codes(UK)
Emergency Tax Code	1257L

(S1257L in Scotland, C1257L in Wales).

(There will be NO uplifts of tax codes for tax year 2023-24 as declared by HMRC).

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2) Income Tax Rates and Bandwidth

The standard personal allowance is £12,570 for the tax year 2023-24, which is the amount of income on which there is no tax. The threshold for PAYE remains unchanged at £242 per week (£1,048 per month). Below are the income tax rates and bandwidth for UK and Scotland that will come into effect from 6th April 2023.

The personal income can be bigger if one claims Marriage Allowance or Blind Person's Allowance. It's smaller if the income is over £100,000

UK Rate of Income Tax:
Table below shows the changes to UK rate of income tax bandwidths from 6 April 2023.

UK Rate	%	Bandwidth
Personal Allowance	0%	Up to £12,570
Basic Rate	20%	20% on annual earnings from £12,571 to £37,700
Higher Rate	40%	40% on annual earnings from £37,701 to £125,140
Additional Rate	45%	45% on annual earnings above £125,140

Scottish Rate of Income Tax:
Table below shows the changes to Scottish rate of income tax bandwidths from 6 April 2023.

Scottish Rate	%	Bandwidth
Starter Rate	19%	19% on annual earnings above the PAYE tax threshold and up to £2,162
Basic Rate	20%	20% on annual earnings from £2,163 to £13,118
Intermediate Rate	21%	21% on annual earnings from £13,119 to £31,092
Higher Rate	42%	42% on annual earnings from £31,093 to £125,140
Top Rate	47%	47% on annual earnings above £125,140

Welsh Rate of Income Tax:
Table below shows the Welsh rate of income tax bandwidths from 6 April 2023.

Welish Rate	%	Bandwidth
Basic Rate	20%	20% on annual earnings above the PAYE tax threshold and up to £37,700
Higher Rate	40%	40% on annual earnings from £37,701 to £125,140
Additional Rate	45%	45% on annual earnings above £125,140

The emergency tax codes from 6 April 2023 are:

1257L W1
1257L M1
1257L X

Click here to know more about emergency tax codes.

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3) Auto Enrolment Mininmum Contribution Rates

The auto enrollement mininmum contribution rate remains unchanged.

Date contribution	Employer Minimum contribution	Employee Minimum contribution	Total Minimum contribution
6th April 2023 onwards	3%	5%	8%

The Lower level of Qualifying Earnings remains at £120 per week / £520 per month for 2023-24

The Upper level of Qualifying Earnings increases to £967 per week / £4,189 per month for 2023-24

Click here to know more about Auto enrolment earnings threshold.

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4) Statutory Payment Rates

Statutory payment rate (weekly) for the tax year 2023-24 are shown in the table below.

Statutory Sick Pay(Weekly)	£109.40
Statutory Maternity Pay (Weekly)	£172.48
Statutory Paternity Pay (Weekly)	£172.48
Statutory Adoption Pay (Weekly)	£172.48
Statutory Shared Parental Pay(Weekly)	£172.48
Statutory Parental Bereavement Pay(Weekly)	£172.48

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5) Student Loan Rates

From 6 April 2023 onward student loan threshold for

1. Plan Type 1 will increase from £20,195 to £22,015 per year.
2. Plan Type 2 remains at £27,295 per year.
3. Plan Type 4 will increase from £25,375 to £27,660 per year.

Only thresholds are different for both the plans but the calculation method and deduction rate(9%) remains the same.

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6) Postgraduate loan deductions

The post graduate loan deduction will remain same.The employee earnings threshold for post graduationis £21,000 per year and loan deduction rate is 6%.

Click here for more information on post graduate loan.

For more information click on the link faq: 4802

7) Company cars fuel rates

For the current tax year 2023-24 HMRC needs addtional information about the employee's company's car.Tax will be applicable to those who's car benefit is payrolled (only to payroll application not for the P11D).

The car fuel rate for the year the tax 2023-24 as below:

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

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8) National Minimum Wage Rates Changes

The national minimum wage rate from 1st April 2023 are shown in the below table.

Category of worker	Hourly rate
Aged 23 and above (national living wage rate)	£10.42
Aged 21 to 22 inclusive	£10.18
Aged 18 to 20 inclusive	£7.49
Aged under 18 (but above compulsory school leaving age)	£5.28
Apprentices aged under 19	£5.28
Apprentices aged 19 and over, but in the first year of their apprenticeship	£5.28

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9) National Insurance Contribution

National Insurance Contributions(NIC) Rates for the tax year 2023-24 are shown in below tables.

Employee NI Rates expressed as percentage

National Insurance category letter	Earnings at or above LEL upto and including PT	Earnings above PT up to and including UEL	Balance of earning above UEL
A	0	12	2
B	0	5.85	2
C	NIL	NIL	NIL
F(Freeport)	0	12	2
H (apprentice under 25)	0	12	2
I(Freeport - married women and widows reduced rate)	0	5.85	2
J	0	2	2
L(Freeport - deferment)	0	2	2
M (under 21)	0	12	2
S (Freeport - state pensioner)	NIL	NIL	NIL
V (veteran)	0	12	2
Z (under 21 - deferment)	0	2	2

Employer NI Rates expressed as percentage

National Insurance category letter	Earnings at or above LEL upto and including ST	Earnings above ST up to and including Freeport upper ST	Earnings above Freeport upper ST up to and including UEL/UST for under 21s,apprentices and veterans	Balance of earning above UEL/UST 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
F(Freeport)	0	0	13.8	13.8
H (apprentice under 25)	0	0	0	13.8
I(Freeport - married women and widows reduced rate)	0	0	13.8	13.8
J	0	13.8	13.8	13.8
L(Freeport - deferment)	0	0	13.8	13.8
M (under 21)	0	0	0	13.8
S(Freeport - state pensioner)	0	0	13.8	13.8
V(veteran)	0	0	0	13.8
Z (under 21 - deferment)	0	0	0	13.8

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10) Termination awards and sporting testimonial payments

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

National Insurance class	2023 to 2024 rate
Class 1A	13.8%

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11) Employment allowance

The employment allowance remains at £5,000 in 2023-24. This means eligible businesses, charities and community amateur sports clubs will be able to claim a greater reduction on their secondary Class 1 NICs and from the 2023 to 2024 tax year onwards their Health and Social Care Levy liabilities (secondary Class 1 NICs element).

Click here for more information regarding the new changes.

12) National Insurance contributions relief for employers who hire armed forces veterans

Employers will need to pay the associated secondary Class 1 National Insurance contributions as normal and then claim it back retrospectively from April 2022 onwards. From April 2022 onwards, employers will be able to apply the relief in real time through PAYE.

This relief is only available for 12 consecutive months from the veteran�s first day of civilian employment.

This zero-rate can be applied up to the upper secondary threshold. This relief is available from April 2021.

Employers will only be able to claim National Insurance contributions relief on the earnings of qualifying veterans. A person qualifies as a veteran if they have served at least one day in the regular armed forces. This includes anyone who has completed at least one day of basic training.

The relief is available to all employers of veterans regardless of when the veteran left the regular armed forces, providing they have not previously been employed in a civilian capacity.

Relief is available for any civilian employment. A civilian employment is one that is not part of the armed forces, and includes employment with organizations that may have strong links to HM Armed Forces, such as the Ministry of Defense or NATO. Employment with a reserve organization is not considered as civilian for the purpose of this relief and do not trigger the qualifying period

Self-employed individuals do not pay Class 1 National Insurance contributions. Therefore, self-employed businesses do not qualify for this relief. In addition, self-employed work does not trigger the qualifying period.

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13) Full Payment Submission (YTD FPS) in place of Earlier Year Update (EYU)

It is now possible to send a Full Payment Submission (FPS) for a previous tax year and after 19th April in the current tax year. From 2021/2022 onwards, you can no longer send an Earlier Year Update (EYU) to correct any mistakes made in the previous tax year you can only send an YTD FPS to report revised year-to-date payment data after the 19th April.

14) Off Payroll Working

Off payroll working the workers who provide the services through intermediary.The intermediary usually be the own personal company, a partnership, a managed service or individual company this rule is also known as IR35. From 6 April 2021, all public sector clients and medium or large-sized private sector clients will be responsible for deciding your worker's employment status. This includes some charities and third sector organizations.

If the off-payroll working rules apply, the fee payer (the public authority, agency or other third party who is responsible for paying the workers intermediary) must:

Calculate a deemed direct payment to account for employment taxes associated with the contract Deduct those taxes from the payment to the workers intermediary.
Report taxes deducted to HMRC through RTI, Full Payment Submission (FPS)
Pay the relevant NICs

If your worker provides services to a public sector client, or a medium or large-sized private sector client, they:

Should get an employment status determination from the client, as well as the reasons behind that determination.
Will be able to dispute the determination given to them if they disagree with it.

Different rules apply if your worker:

does not get an employment status determination from the client
provides services to small clients in the private sector

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15) Employer Payment Summary (EPS)

You need to fill the additional information about the employer before you file the EPS to HMRC.The additional information required is,

Economic Activity Details:

Is Employer in Agricultural sector?
Is Employer in the Fisheries and Aquaculture sector?
Is Employer in the Road Transport sector?
Is Employer in the Industrial sector?
Do State-aid rules apply to the Employer?

Note: You can only fill these section when the Employment Allowance Indicator is "YES". Without the indicator is yes you can't fill the Economic activity details.