Rates and thresholds for employers 2022 to 2023 (2023)

The Health and Social Care Levy will no longer go ahead.

From 6 November 2022, the temporary 1.25 percentage point increase in National Insurance rates is being reversed for the rest of the financial year.

The introduction of a separate Health and Social Care Levy tax in April 2023 has been cancelled.

Unless otherwise stated, the following figures apply from 6 April 2022 to 5 April 2023.

PAYE tax and Class 1 National Insurance contributions

You normally operate PAYE as part of your payroll so HMRC can collect Income Tax and National Insurance from your employees.

Your payroll software will work out how much tax and National Insurance to deduct from your employees’ pay. If you decide to run payroll yourself, you can find payroll software.

(Video) Employers Update on the National Insurance Threshold Increase from July 2022

Tax thresholds, rates and 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.

England and Northern Ireland

PAYE tax rates and thresholds 2022 to 2023
Employee personal allowance £242 per week
£1,048 per month
£12,570 per year
English and Northern Irish basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,700
English and Northern Irish higher tax rate 40% on annual earnings from £37,701 to £150,000
English and Northern Irish additional tax rate 45% on annual earnings above £150,000

Scotland

PAYE tax rates and thresholds 2022 to 2023
Employee personal allowance £242 per week
£1,048 per month
£12,570 per year
Scottish starter tax rate 19% on annual earnings above the PAYE tax threshold and up to £2,162
Scottish basic tax rate 20% on annual earnings from £2,163 to £13,118
Scottish intermediate tax rate 21% on annual earnings from £13,119 to £31,092
Scottish higher tax rate 41% on annual earnings from £31,093 to £150,000
Scottish top tax rate 46% on annual earnings above £150,000

Wales

PAYE tax rates and thresholds 2022 to 2023
Employee personal allowance £242 per week
£1,048 per month
£12,570 per year
Welsh basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,700
Welsh higher tax rate 40% on annual earnings from £37,701 to £150,000
Welsh additional tax rate 45% on annual earnings above £150,000

Emergency tax codes

The emergency tax codes from 6 April 2022 are:

  • 1257L W1
  • 1257L M1
  • 1257L X

Find out more about emergency tax codes.

Class 1 National Insurance thresholds

You can only make National Insurance deductions on earnings above the lower earnings limit.

Class 1 National Insurance thresholds 2022 to 2023
Lower earnings limit £123 per week
£533 per month
£6,396 per year
Primary threshold 6 April 2022 to 5 July 2022:

£190 per week
£823 per month
£9,880 per year

6 July 2022 to 5 April 2023:

£242 per week
£1,048 per month
£12,570 per year

Directors
For the whole tax year:

£229 per week
£11,908 per year

Secondary threshold £175 per week
£758 per month
£9,100 per year
Freeport upper secondary threshold £481 per week
£2,083 per month
£25,000 per year
Upper secondary threshold (under 21) £967 per week
£4,189 per month
£50,270 per year
Apprentice upper secondary threshold (apprentice under 25) £967 per week
£4,189 per month
£50,270 per year
Veterans upper secondary threshold £967 per week
£4,189 per month
£50,270 per year
Upper earnings limit £967 per week
£4,189 per month
£50,270 per year

Class 1 National Insurance rates

Employee (primary) contribution rates

Deduct primary contributions (employee’s National Insurance) from your employees’ pay through PAYE.

National Insurance category letter Earnings at or above lower earnings limit up to and including primary threshold Earnings above the primary threshold up to and including upper earnings limit Balance of earnings above upper earnings limit
A 0% 13.25% 3.25%
B 0% 7.1% 3.25%
C nil nil nil
F (Freeport) 0% 13.25% 3.25%
H (apprentice under 25) 0% 13.25% 3.25%
I (Freeport — married women and widows reduced rate) 0% 7.1% 3.25%
J 0% 3.25% 3.25%
L (Freeport — deferment) 0% 3.25% 3.25%
M (under 21) 0% 13.25% 3.25%
S (Freeport — state pensioner) nil nil nil
V (veteran) 0% 13.25% 3.25%
Z (under 21 — deferment) 0% 3.25% 3.25%

Employer (secondary) contribution rates

You pay secondary contributions (employer’s National Insurance) to HMRC as part of your PAYE bill. Find out more about running payroll and paying HMRC.

Pay employers’ PAYE tax and National Insurance.

National Insurance category letter Earnings at or above lower earnings limit up to and including secondary threshold Earnings above secondary threshold up to and including Freeport upper secondary threshold Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans
A 0% 15.05% 15.05% 15.05%
B 0% 15.05% 15.05% 15.05%
C 0% 15.05% 15.05% 15.05%
F (Freeport) 0% 0% 15.05% 15.05%
H (apprentice under 25) 0% 0% 0% 15.05%
I (Freeport — married women and widows reduced rate) 0% 0% 15.05% 15.05%
J 0% 15.05% 15.05% 15.05%
L (Freeport — deferment) 0% 0% 15.05% 15.05%
M (under 21) 0% 0% 0% 15.05%
S (Freeport — state pensioner) 0% 0% 15.05% 15.05%
V (veteran) 0% 0% 0% 15.05%
Z (under 21 — deferment) 0% 0% 0% 15.05%

Class 1A National Insurance: expenses and benefits

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

(Video) National Insurance Changes that YOU Need to Know About! - 2022/2023 Tax Year

Find out more about expenses and benefits for employers.

Class 1A National Insurance: 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 2022 to 2023 is 15.05%

Pay employers’ Class 1A National Insurance.

Class 1B National Insurance: 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 2022 to 2023 is 15.05%

Pay Class 1B National Insurance.

National Minimum Wage

The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law. Find out more about who can get the minimum wage.

(Video) 2022 Tax Law Updates for Business Entities (EA Exam Updates)

Use the National Minimum Wage calculator to check if you’re paying a worker the National Minimum Wage or if you owe them payments from past years.

These rates apply from 1 April 2022.

Category of worker Hourly rate
Aged 23 and above (national living wage rate) £9.50
Aged 21 to 22 inclusive £9.18
Aged 18 to 20 inclusive £6.83
Aged under 18 (but above compulsory school leaving age) £4.81
Apprentices aged under 19 £4.81
Apprentices aged 19 and over, but in the first year of their apprenticeship £4.81

Check National Minimum Wage rates for previous years.

Use the maternity, adoption and paternity calculator for employers to work out your employee’s:

  • Statutory Maternity Pay (SMP)
  • paternity or adoption pay
  • qualifying week
  • average weekly earnings
  • leave period

These rates apply from 3 April 2022.

Type of payment or recovery 2022 to 2023 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 £156.66 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Paternity Pay (SPP) — weekly rate £156.66 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 £156.66 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Shared Parental Pay (ShPP) —weekly rate £156.66 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Parental Bereavement Pay (SPBP) — weekly rate £156.66 or 90% of the employee’s average weekly earnings, whichever is lower
SMP, SPP, ShPP, SAP or SPBPproportion 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

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.

Use the Statutory Sick Pay calculator to work out your employee’s sick pay, or use these rates.

Unrounded daily rates Number of qualifying days in week 1 day to pay 2days to pay 3days to pay 4days to pay 5days to pay 6days to pay 7days to pay
£14.1929 7 £14.20 £28.39 £42.58 £56.78 £70.97 £85.16 £99.35
£16.5583 6 £16.56 £33.12 £49.68 £66.24 £82.80 £99.35
£19.87 5 £19.87 £39.74 £59.61 £79.48 £99.35
£24.8375 4 £24.84 £49.68 £74.52 £99.35
£33.1167 3 £33.12 £66.24 £99.35
£49.675 2 £49.68 £99.35
£99.35 1 £99.35

Student loan and postgraduate loan recovery

If your employees’ earnings are above the earnings threshold, record their student loan and postgraduate loan deductions in your payroll software. It will automatically calculate and deduct repayments from their pay.

(Video) Payroll Question Time | October 2022 - Sd Worx webinar

Rate or threshold 2022 to 2023 rate
Employee earnings threshold for student loan plan 1 £20,195 per year
£1,682.91 per month
£388.36 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 £25,375 per year
£2,114.58 per month
£487.98 per week
Student loan deductions 9%
Employee earnings threshold for postgraduate loan £21,000 per year
£1,750.00 per month
£403.84 per week
Postgraduate loan deductions 6%

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 2022.

Engine size Petrol — amount per mile LPG — amount per mile
1400cc or less 13 pence 8 pence
1401cc to 2000cc 15 pence 10 pence
Over 2000cc 22 pence 15 pence
Engine size Diesel — amount per mile
1600cc or less 11 pence
1601cc to 2000cc 13 pence
Over 2000cc 16 pence

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

Check advisory fuel rates for previous periods.

Advisory electricity rate for fully electric cars

Amount per mile: 5 pence.

Electricity is not a fuel for car fuel benefit purposes.

Employee vehicles: mileage allowance payments

Mileage allowance payments are what you pay your employees for using their own vehicle 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.

(Video) 6th BASL Webinar 2022 - Changes Proposed by the Inland Revenue (Amendment) Bill

Find out more about reporting and paying mileage allowance payments.

Type of vehicle Rate per business mile 2022 to 2023
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

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount.

Allowance 2022 to 2023 rate
Employment Allowance £5,000

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 2022 to 2023 rate
Apprenticeship Levy allowance £15,000
Apprenticeship Levy charge 0.5%

FAQs

What is the employers NI threshold for 2022-23? ›

The table below shows the National Insurance bands for 2022-23. Note that the 'Lower Earnings Limit' for 2022-23 has been raised to £123 per week / £533 per month.

What is the employer NI threshold? ›

The amount of employers' national insurance payable depends on how much the employee earns. Employers pay class 1 contributions of 15.05% on all earnings above the secondary threshold for almost all employees: for 2022/2023 this threshold is £175.01 per week or £758.0.

Is there an upper earnings limit for employers NI? ›

d) The Upper Earnings Limit (or UEL)

This is £967 per week for 2022/23. For high earners who are paid over the Upper Earnings Limit, the National Insurance rate falls. On earnings above this limit, the employee pays a lower rate of 3.25% .

What is the SSP rate for 2022? ›

HM Revenue and Customs (HMRC) has confirmed the 2022-23 rates for statutory pay. The first six weeks of Statutory Maternity Pay (SMP) and Statutory Adoption Pay (SAP) remain the same, at 90% of the employee's average weekly earnings (AWE).

Is employers NI increasing in 2022? ›

From 6 November 2022, the temporary 1.25 percentage point increase in National Insurance rates is being reversed for the rest of the financial year. The introduction of a separate Health and Social Care Levy tax in April 2023 has been cancelled.

What is the difference between Lel and primary threshold? ›

The lower earnings limit is set each tax year by the government. Even if an employee earns more than the lower earnings limit (LEL), they are not required to pay primary, class one national insurance contributions until their earnings reach the primary threshold.

How much tax does an employer pay for an employee UK? ›

Employment Taxes (England, Wales & Northern Ireland)
Employee taxes: PAYE (Income tax)20%-45% (depending on earnings)
National Insurance (social security)13.25 - 3.25% (subject to earnings threshold **********)
Employer taxes: National Insurance15.05%

What is the new tax code for 2022 to 2023? ›

The most common tax code for the 2022-23 tax year is 1275L. It means that you are entitled to the full Personal Allowance of £12,570. And, as the tax free Personal Allowance amount is locked in until 2026, this will remain the most common tax code until then.

What is the primary and secondary threshold? ›

The difference between the primary and secondary threshold for NI is that the primary threshold relates to employees National Insurance. The secondary threshold for national insurance is only relevant for employers National Insurance payments.

What is the current SMP rate 2022? ›

HM Revenue and Customs (HMRC) has confirmed the 2022-23 rates for statutory pay. The first six weeks of Statutory Maternity Pay (SMP) and Statutory Adoption Pay (SAP) remain the same, at 90% of the employee's average weekly earnings (AWE).

What is the primary threshold? ›

The Primary Threshold is the amount an employee can earn before having National Insurance Contributions (NICs) deducted from their gross pay. We should briefly consider the Lower Earnings Limit and its relationship to the Primary Threshold.

What is SMP rate? ›

Statutory Maternity Pay ( SMP ) is paid for up to 39 weeks. You get: 90% of your average weekly earnings (before tax) for the first 6 weeks. £156.66 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks.

What does the NI increase mean for employers? ›

This means the rate for employers will stand at 15.3% on all earnings above the secondary threshold for most employees. For employers, the increase is being introduced at a time when businesses are preparing themselves for a jump in corporation tax from 2023.

What is the minimum employer pension contribution 2022? ›

This is set at 8% of your member of staff's earnings. You, the employer, must pay at least 3% of this, but you can choose to pay more.

How is employers NI calculated? ›

How much NI does an employer pay in the UK? It depends on the size of your business and the National Insurance category of your employees. As we've seen, for the tax year 22/23, employers need to pay a 15.05% contribution on any employee earnings exceeding the secondary threshold, which is £175/week or £758/month.

What is the secondary threshold? ›

Related Content. Also known as the secondary earnings threshold. An amount set each year by the government that triggers liability for an employer to pay National insurance contributions (NICs) on an employee's earnings.

What is upper earnings limit? ›

Related Content. An amount set by the government for each tax year for the purposes of calculating National Insurance contributions (NICs) payable by employees.

How does my employer calculate my tax? ›

Employers calculate withholding tax by referring to an employee's Form W-4 and the IRS's income tax withholding table to determine how much federal income taxes they should withhold from the employee's salary or wages.

What are employer costs for payroll? ›

Payroll costs consist of all costs incurred by an employer to compensate its employees. These costs include employee compensation and the employer-paid portion of all payroll taxes. The employer-paid portion of these taxes encompasses FICA taxes and government unemployment insurance programs.

How much does PAYE cost an employer? ›

PAYE (Pay as you Earn)

For all earnings above an employees tax free threshold up to £50,270 per annum the basic rate of tax is 20%, for earnings between £50,271 p.a and £150,000 p.a the rate is 40% and for earnings above £150,000 p.a. it is 45%.

What will tax rates be in 2023? ›

These changes are effective for the 2023 tax year. The U.S. has a progressive, or graduated, tax system, so income isn't taxed a flat rate. Instead, it's taxed at differing rates — 10%, 12%, 22%, 24%, 32%, 35% and 37% — as it rises past certain thresholds, or tax brackets.

What is the difference between tax code 1250L and 1257L? ›

Tax code 1257L will be the most common tax code for the tax year 2021/22 and 2022/23. It is expected to be unchanged until 2026. It replaces tax code 1250L, which was the most popular tax code for the previous 2 tax years (2019/20 and 2020/21).

Do I have to pay employers National Insurance? ›

All UK employers have to pay Employers NIC, and an Umbrella Company is no different. We have to pay Employers NIC on the income we receive as part of the work you do. Ideally, the rate you are offered to work through an Umbrella Company should be uplifted to account for the umbrella's employment costs.

What is employer NI? ›

National Insurance (NI) is a tax on earnings paid by employers and employees to fund various benefits including the state pension, statutory sick pay and maternity leave.

Do I have to pay employers National Insurance? ›

All UK employers have to pay Employers NIC, and an Umbrella Company is no different. We have to pay Employers NIC on the income we receive as part of the work you do. Ideally, the rate you are offered to work through an Umbrella Company should be uplifted to account for the umbrella's employment costs.

Why am I paying employers NI as an employee? ›

“Employers NI and the Apprenticeship Levy are deductions that are required to come out of the assignment rate that a temporary worker negotiates with their agency or client. There is a common misconception that umbrella companies are being unreasonable and unfair by passing these employment costs on.

Do employers pay NI on pension contributions? ›

But unlike a salary payment, pension contributions aren't liable for employer's national insurance (of up to 15.05%).

What is the minimum employer pension contribution 2022? ›

This is set at 8% of your member of staff's earnings. You, the employer, must pay at least 3% of this, but you can choose to pay more.

What percentage is employers pension contribution? ›

Workplace pension contributions
The minimum your employer paysTotal minimum contribution
From April 20193%8%

How are NI contributions calculated? ›

Your employer will deduct Class 1 National Insurance (NI) from your salary, overtime, sick pay, commission or bonus, maternity/paternity and adoption pay. Because, it is their responsibility to pay your National Insurance (NI). It is calculated on your gross earning, before deducting tax and/or pension.

What taxes do employers pay? ›

The federal government requires employers and employees to pay social security and Medicare taxes, based on a percentage of an employee's pay. Only the social security tax has an annual wage base limit. The wage base limit is the maximum wage that is subject to the tax for that year.

How much is employers NI for umbrella company? ›

Employers, including umbrella companies, have seen their Employer's National Insurance rates increase from 13.8% to 15.05%, which will now revert back to 12% and 13.8%, respectively, from November 2022.

Do umbrella companies pay employers NI? ›

The rate paid to the umbrella company by the agency will need to cover the costs of the employer National Insurance contributions. The umbrella company will use this money to pay employer contributions and not deduct the contributions from your gross pay.

Can I claim back employers NI? ›

Employers NI Allowance can be claimed at any point during the tax year and backdated for up to four years provided you have all the relevant paperwork. You can make the claim with HMRC as part of your Real Time Information submission, or RTI.

Can I stop paying National Insurance after 35 years? ›

You do not pay National Insurance after you reach State Pension age - unless you're self-employed and pay Class 4 contributions. You stop paying Class 4 contributions at the end of the tax year in which you reach State Pension age.

What is umbrella rate? ›

What we are seeing is that many contractors are being quoted an “umbrella rate” which is, and always has been the Gross (Contract) Rate. If you are quoted an umbrella rate then this is deemed to meet all employment costs before the taxable salary is arrived at.

Are employer pension contributions based on gross or net salary? ›

You'll need to calculate contributions based on the worker's pensionable earnings. This is the amount of the worker's pay you'll use to work out contributions. You'll need to calculate contributions on the gross pay before deducting tax and National Insurance, and then deduct contributions from the net pay.

Does my employer have to match my pension contributions? ›

No. An employer doesn't have to match employee contributions. Currently, the minimum contribution is 8% of qualifying earnings, of which at least 3% must be paid by the employer.

Is it worth paying into a pension at 60? ›

You can still be financially secure at retirement even if you start saving with a workplace pension later in life. Every time you pay into a workplace pension, you'll get contributions from your employer and extra money from government tax relief if you're eligible.

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