Tax Rates and Thresholds Update
HMRC have released the updated tax rates and thresholds, unless otherwise stated these apply from 6 April 2020 to 5 April 2021. Some small changes have been made, but overall it is quite similar to 2019/2020.
National Minimum Wage
There has been an increase in minimum wage across all ages. For people aged 25 and older this has increased to £8.72 from £8.21.
These rates apply from 1 April 2020.
| Worker | Hourly Rate 2020 to 2021 | Hourly Rate 2019 to 2020 |
| Aged 25 and above | £8.72 | £8.21 |
| Aged 21 to 24 | £8.20 | £7.70 |
| Aged 18 to 20 | £6.45 | £6.15 |
| Aged under 18 (but above compulsory school leaving age) | £4.55 | £4.35 |
| Apprentices aged under 19 | £4.15 | £3.90 |
| Apprentice aged 19 and over, but in the first year of apprenticeship | £4.15 | £3.90 |
PAYE Tax Rates and Thresholds
There has been no changes to the thresholds for this financial year.
England, Wales and Northern Ireland
| PAYE tax rates and thresholds | 2020 to 2021 | 2019 to 2020 |
| Personal Allowance | £12,500 | £12,500 |
| Basic Rate Tax | 20% on annual earnings above £37,500 | 20% on annual earnings above £37,500 |
| Higher Rate Tax | £40% on annual earnings from £37,501 to £150,000 | £40% on annual earnings from £37,501 to £150,000 |
| Additional Tax Rate | 45% on annual earnings above £150,00 | 45% on annual earnings above £150,00 |
Class 1 National Insurance Thresholds
There has been some slight changes to the Class 1 National Insurance thresholds.
| Class 1 National Insurance Thresholds | 2020 to 2021 | 2019 to 2020 |
| Lower Earnings Limit | £6,240 | £6,136 |
| Primary Threshold | £9,500 | £8,632 |
| Secondary Threshold | £8,788 | £8,632 |
| Upper Secondary Threshold (Under 21) | £50,000 | £50,000 |
| Apprentice Upper Secondary Threshold (apprentice under 21) | £50,000 | £50,000 |
| Upper Earnings Limit | £50,000 | £50,000 |
Class 1 National Insurance Rates
No changes have been made to the national insurance rates from the year ended 5 April 2020.
| NI Category letter | Employee Rates – above the primary threshold up to and including upper earnings limit | Employer Rates – above the primary threshold up to and including upper earnings limit |
| A | 12% | 13.80% |
| B | 5.85% | 13.80% |
| C | NIL | 13.80% |
| H | 12% | 0% |
| J | 2% | 13.80% |
| M | 12% | 0% |
| Z | 2% | 0% |
There has also been some small adjustments to the rates and thresholds regarding statutory maternity pay, statutory sick pay, student loans and so on. If you would like further information on this please feel free to contact us.
If you are interested in our payroll services please contact us: https://entitybookkeeping.co.uk/contact/
Sources:
https://www.gov.uk/guidance/rates-and-thresholds-for-employers-2020-to-2021
Please note: This article is intended to be an explanation of general principles and is not directed as advice for your particular situation. Please always check with qualified professionals regarding your business.