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.

WorkerHourly Rate 2020 to 2021Hourly 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 thresholds2020 to 20212019 to 2020
Personal Allowance £12,500£12,500
Basic Rate Tax 20% on annual earnings above £37,50020% 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 £150,0045% 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 Thresholds2020 to 20212019 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 limitEmployer Rates – above the primary threshold up to and including upper earnings limit

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

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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.

Categories: PayrollTax