The new tax year started on 6th April 2024, and in this article, we’ll detail the things that Fair Pay Services employees might need to know.
PAYE tax rates and allowances
Personal allowances for PAYE tax and the primary threshold for National Insurance Contributions (NICs) are already aligned at £12,570 and this will remain the same in tax year 2024/25. The other PAYE tax rates and thresholds also remain the same.
| Tax Rate | 2023/24 (the last tax year) | 2024/25 (the new tax year) |
| Personal allowance (0%) | £0-£12,570 | £0-£12,570 |
| Basic Rate Income Tax (20%) | £12,571 – £50,270 | £12,571 – £50,270 |
| Higher Rate Income Tax (40%) | £50,271 – £125,140 | £50,271 – £125,140 |
| Additional Rate Income Tax (45%) | £125,140 onwards | £125,140 onwards |
National Insurance
The “starter” rate of Employee National Insurance has been reduced from 10% to 8%. This comes on top of a reduction from 12% to 10% that was implemented in January 2024.
The rates and thresholds for Employers National Insurance that is paid by UK employers – including umbrella companies – have not changed.
Statutory Payments
The rate of Statutory Sick Pay (SSP) has increased to £116.75 per week and Statutory Maternity/Paternity pay (SMP/SPP) has increased to the lower of £184.03 per week or 90% of average weekly earnings.
The SPP rules are changing to allow fathers/partners to take either 1 or 2 whole weeks together, or 2 separate blocks of 1 week. The new rules apply if the baby is due on or after 7th April 2024.
The Pension Allowance
In April 2023, the Government increased the tax-free limit on pension contributions from £40,000 to £60,000. It remains the same this year, and the lifetime allowance will be abolished from April 2024. You can also use any unused allowance from the last three tax years, which is worth knowing if you have lump sum that you’d like to move into your pension.
Student Loan Thresholds
If you have a student loan on plan 1 or 4, the threshold for repayments is increasing:
Plan 1 (pre-2012): the threshold rises to £24,990
Plan 4 (Scottish students): The threshold rises to £31,395
National Minimum Wage
The National Minimum/Living Wage rates will increase. These are the minimum hourly rates UK employers – including umbrella companies – are allowed to pay their employees.
| National Living Wage – 21+ | £11.44 |
| Development Rate – 18-20 | £8.60 |
| Young Workers 16-17 | £6.40 |
| Apprentice Rate – under 19, or in the first year of apprenticeship. | £6.40 |
If you have questions or if we can help in any way, please call our expert team on 01604 360222 or email [email protected]
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