Tax rates & credit rates & thresholds 2023/24 tax year

Earlier this year, HMRC announced the tax rates, tax credit rates and income thresholds for the 2023/24 tax year which those processing payroll for employees should be aware of.

Tax rates and tax bands

The amount someone can earn each year before they start paying the income tax additional rate of 45% has changed. It has been reduced from £150,000 to £125,140. Below are the tax rates and tax bands for this tax year and for the previous tax year.

Personal allowance

The personal allowance is set at £12,570 for 2023/24. Both the personal allowance and the basic rate limit have been fixed in value from 2021/22. The higher rate threshold – the point at which individuals become liable to pay tax at the higher rate – remains unchanged at £50,270 for 2023/24.

Marriage allowance

Married couples and civil partners may be entitled to claim the marriage allowance. Individuals whose income is insufficient to make full use of their personal allowance may transfer this unused fraction to their spouse or civil partner, up to a set amount. Individuals cannot make use of this provision if their spouse or partner pays more than the basic rate of tax. For 2023/24 the maximum that can be transferred is £1,260.

National Insurance Contribution Thresholds

In 2023/24, the National Insurance contribution (NICs) rates for both employees and employers will remain the same. As an employee, you will be required to pay 12% NICs on all earnings between the primary threshold and the upper earnings limit, and 2% NICs on earnings above the upper earnings limit. Meanwhile, employers are responsible for paying 13.8% NICs on earnings above the secondary threshold.

There are no changes to the weekly lower earnings limit (LEL), or the weekly secondary threshold. The weekly primary threshold was increased from 6th July 2022 to £242 per week, up from £190. There is no change to the upper earnings limit (UEL) which is set at £967 per week.There have been some increases in Class 2,3 and 4 rates (see table below).

The Employment allowance has remained at £5,000 for 2023/23 per employer for the tax year.

For more information, see the gov.uk website.

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