With the new tax year fast approaching, HMRC have released the new thresholds for the 2018-19 tax year.
We are going to split the various areas into their own sections.
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.
| PAYE tax rates and thresholds | 2018 to 2019 |
|---|---|
| Employee personal allowance | £228 per week £988 per month £11,850 per year |
| UK basic tax rate | 20% on annual earnings above the PAYE tax threshold and up to £34,500 |
| UK higher tax rate | 40% on annual earnings from £34,501 to £150,000 |
| UK additional tax rate | 45% on annual earnings above £150,000 |
Emergency Tax Codes
The emergency tax codes from 6 April 2018 are:
- 1185L W1
- 1185L M1
- 1185L X
National Minimum Wage
The rates below apply from 1 April 2018
| Category of worker | Hourly rate |
|---|---|
| Aged 25 and above (national living wage rate) | £7.83 |
| Aged 21 to 24 inclusive | £7.38 |
| Aged 18 to 20 inclusive | £5.90 |
| Aged under 18 (but above compulsory school leaving age) | £4.20 |
| Apprentices aged under 19 | £3.70 |
| Apprentices aged 19 and over, but in the first year of their apprenticeship | £3.70 |
Statutory Maternity, Paternity, Adoption and Shared Parental Pay
You will still need to check your employee is eligible for any of the above, below is the table stating the amounts they could be due
| Type of payment or recovery | 2018 to 2019 rate |
|---|---|
| SMP – weekly rate for first 6 weeks | 90% of the employee’s average weekly earnings |
| SMP – weekly rate for remaining weeks | £145.18 or 90% of the employee’s average weekly earnings, whichever is lower |
| Statutory Paternity Pay (SPP) – weekly rate | £145.18 or 90% of the employee’s average weekly earnings, whichever is lower |
| Statutory Adoption Pay (SAP) – weekly rate for first 6 weeks | 90% of employee’s average weekly earnings |
| SAP – weekly rate for remaining weeks | £145.18 or 90% of the employee’s average weekly earnings, whichever is lower |
| Statutory Shared Parental Pay (ShPP) – weekly rate | £145.18 or 90% of the employee’s average weekly earnings, whichever is lower |
| SMP/SPP/ShPP/SAP – proportion 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
The same weekly SSP 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’ (QDs) they work each week.
| Unrounded daily rates | Number of QDs in week | 1 day to pay | 2 days to pay | 3 days to pay | 4 days to pay | 5 days to pay | 6 days to pay | 7 days to pay |
|---|---|---|---|---|---|---|---|---|
| £13.1500 | 7 | £13.15 | £26.30 | £39.45 | £52.60 | £65.75 | £78.90 | £92.05 |
| £15.3416 | 6 | £15.35 | £30.69 | £46.03 | £61.37 | £76.71 | £92.05 | |
| £18.4100 | 5 | £18.41 | £36.82 | £55.23 | £73.64 | £92.05 | ||
| £23.0125 | 4 | £23.02 | £46.03 | £69.04 | £92.05 | |||
| £30.6833 | 3 | £30.69 | £61.37 | £92.05 | ||||
| £46.0250 | 2 | £46.03 | £92.05 | |||||
| £92.0500 | 1 | £92.05 |
| |||||
Student Loan Recovery
If your employees’ earnings are above the earnings threshold, record their student loan deductions in your payroll software. It will automatically calculate and deduct repayments from their pay.
| Rate or threshold | 2018 to 2019 rate |
|---|---|
| Employee earnings threshold for Plan 1 | £18,330 per year £1,527.50 per month £352.50 per week |
| Employee earnings threshold for Plan 2 | £25,000 per year £2,083.33 per month £480.76 per week |
| Student loan deductions | 9% |
Mileage Allowance Payments – (MAPS)
MAPs are what you pay your employees for using their own vehicle for business journeys.
You can pay your employees an approved amount of MAPs 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.
Find out more about reporting and paying MAPs.
| Type of vehicle | Rate per business mile 2018 to 2019 |
|---|---|
| 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 |