March 16th 2023, Release Note: WFM UK | Payroll & Pensions: New Tax Year 2023/2024

Summary

Year-End Updates 2023/2024

Changes made in the system relating to Payroll and Pensions, in preparation for the new tax year

Release date for all features: 16th March 2023

 

Year-End Updates 2023/2024

• Enabled by Default? - Yes
• Set up by customer Admin? - No
• Enable via Support ticket? - No
• Affects configuration or data? - No

What's Changing?

This release note contains all changes made in the system required to allow legislative compliance from 6th April 2023 (unless another date otherwise stated).

Reason for the Change

His Majesty’s Revenue and Customs (HMRC) is implementing changes to legislation agreed upon by the UK Government, for the tax year beginning 6th April 2023.

Customers Affected

All customers using the Payroll and Pension module, where pay dates fall on or after the 6th of April 2023.

Release Note Contents

 Please Note: Due to there being no new legislation introduced in the 2023/2024 tax year there will not be a partnering article detailing all legislation updates, rates and thresholds. These details are included in this release note instead.

(select a heading from the list below to be taken to that part of the release note)

• Payroll Statutory Information Page
• Pension Statutory Information Page
• PAYE - Income Tax
• PAYE - National Insurance
• Employment Allowance
• Apprenticeship Levy
• Student Loans and Post Graduate Loans
• National Minimum Wage (NMW) and National Living Wage (NLW)
• Statutory Payments - Statutory Sick Pay and Statutory Parental Pay
• Pension (Automatic Enrolment)
• Rolling the Portal Forward into the new Tax Year

Release Notes

Payroll Statutory Information Page

Within the Payroll module, there is a Statutory Information page that contains the rates and allowances for the current and previous tax years. This page is updated annually with the new tax year’s rates and defaults to the tax year the payroll module is in. 

• To view this page, go to Payroll Module > Administration > Payroll Statutory Information

Fig.1 - Payroll Statutory Information Page - for example, the NI Thresholds for 2023/2024 Tax Year

 

Pension Statutory Information Page

Within the Pension module, there is a Statutory Information page that contains the rates and thresholds for the current and previous tax years. This page is updated annually with the new tax year’s rates and defaults to the tax year the payroll module is in. 

• To view this page, go to Pension Module > Administration > Pension Statutory Information

Fig.2 - Pension Statutory Information Page - for example, the Lower Thresholds for 2023/2024 Tax Year

 

PAYE - Income Tax

Tax Codes:

The emergency tax code for 2023/2024 will remain as 1257L

There will be no tax code uplifts completed for the 2023/2024 tax year.

All Week 1 Month 1 Indicators will not be taken forward into the 2023/2024 tax year, for any tax code.

Tax codes with the suffix L, M or N will not increase and any other tax code changes will notify by P9/P6.

 

PAYE Income Tax Thresholds:

There is no change compared to the 2022/2023 tax year.

Earnings Frequency	Threshold
Weekly	£242
Monthly	£1,048
Annual	£12,570

 

The UK Rate of Income Tax (Excluding Scotland and Wales):

Changes for 2023/2024 tax year:

• The Additional Rate threshold has been reduced from earnings over £150,000 to earnings over £125,140.

Tax Rate	Rate	Income after allowances from	Income after allowances to
Basic Tax Rate	20%	£1	£37,700
Higher Tax Rate	40%	£37,701	£125,140
Additional Tax Rate	45%	£125,141+

 

The Scottish Rate of Income Tax (SRIT):

Scottish Tax codes will be prefixed with the letter S

Changes for 2023/2024 tax year:

• The Additional Tax Rate threshold has been reduced from earnings over £150,000 to earnings over £125,140.
• The Higher Tax Rate percentage has increased from 41% to 42%. 
• The Additional Tax Rate percentage has increased from 46% to 47%. 

Tax Rate	Rate	Income after allowances from	Income after allowances to
Starter Tax Rate	19%	£1	£2,162
Basic Tax Rate	20%	£2,163	£13,118
Intermediate Tax Rate	21%	£13,119	£31,092
Higher Tax Rate	42%	£31,093	£125,140
Additional Tax Rate	47%	£125,141+

 

The Welsh Rate of Income Tax (WRIT):

Welsh Tax codes will be prefixed with the letter C

Changes for the 2023/2024 tax year:

• The Additional Rate threshold has been reduced from earnings over £150,000 to earnings over £125,140.

Tax Rate	Rate	Income after allowances from	Income after allowances to
Basic Tax Rate	20%	£1	£37,700
Higher Tax Rate	40%	£37,701	£125,140
Additional Tax Rate	45%	£125,141+

 

PAYE - National Insurance

PAYE National Insurance Thresholds:

Apart from the Annual Primary Threshold for Directors NIC being increased to £12,570, all thresholds have been frozen for the 2023/2024 tax year.

NI Threshold	Weekly	Fortnightly	Lunar	Monthly	Annually
Lower Earnings Limit (LEL)	£123	£246	£492	£533	£6,396
Primary Threshold (PT) Non-Directors	£242	£484	£967	£1,048	£12,570
Primary Threshold (PT) Directors	N/A	N/A	N/A	N/A	£12,570
Secondary Threshold (ST)	£175	£350	£700	£758	£9,100
Freeport Upper Secondary Threshold (FUST)	£481	£962	£1,924	£2,083	£25,000
Upper Secondary Threshold (UST)	£967	£1,934	£3,867	£4,189	£50,270
Apprentice Upper Secondary Threshold (AUST)	£967	£1,934	£3,867	£4,189	£50,270
Veterans Upper secondary Threshold (VUST)	£967	£1,934	£3,867	£4,189	£50,270
Upper Earnings Limit (UEL)	£967	£1,934	£3,867	£4,189	£50,270

 

PAYE National Insurances Rates (Class 1 NIC):

There is no change compared to how the 2022/2023 tax year ended.

	Employee's Contribution				Employer's Contribution
Table Letter	Earnings below LEL	Earnings above LEL up to PT	Earnings above PT up to UEL	Earnings above UEL	Earnings below LEL	Earnings above LEL up to ST	Earnings above ST up to FUST	Earnings above FUST up to UST / AUST / VUST	Earnings above UST / AUST / VUST
A	NIL	0%	12%	2%	NIL	0%	13.8%	13.8%	13.8%
B	NIL	0%	5.85%	2%	NIL	0%	13.8%	13.8%	13.8%
C (over state pension age)	NIL	NIL	NIL	NIL	NIL	0%	13.8%	13.8%	13.8%
F (Freeport Standard)	NIL	0%	12%	2%	NIL	0%	0%	13.8%	13.8%
H (Apprentice under 25)	NIL	0%	12%	2%	NIL	0%	0%	0%	13.8%
I (Freeport MWRRE)	NIL	0%	5.85%	2%	NIL	0%	0%	13.8%	13.8%
J (Deferment)	NIL	0%	2%	2%	NIL	0%	13.8%	13.8%	13.8%
L (Freeport deferment)	NIL	0%	2%	2%	NIL	0%	0%	13.8%	13.8%
M (Under 21)	NIL	0%	12%	2%	NIL	0%	0%	0%	13.8%
S (Freeport over pension age)	NIL	NIL	NIL	NIL	NIL	0%	0%	13.8%	13.8%
V (Veterans Standard)	NIL	0%	12%	2%	NIL	0%	0%	0%	13.8%
Z (Under 21 deferment)	NIL	0%	2%	2%	NIL	0%	0%	0%	13.8%

 

Employment Allowance

No change has been made to employment allowance, and it remains at £5,000 for the 2023/2024 Tax year.

 

Apprenticeship Levy Allowance

No change has been to the Apprenticeship Levy allowance, and it remains at £15,000.

 

Student and Postgraduate Loans

Changes for 2023/2024 tax year:

• Plan Type 1 annual threshold has been increased from £20,195 to £22,015
• Plan Type 4 (Scotland) annual threshold has been increased from £25,375 to £27,660

Loan Type	Annual Threshold	Rate
Plan Type 1	£22,015	9%
Plan Type 2	£27,295	9%
Postgraduate Loan	£21,000	6%
Plan Type 4 (Scotland)	£27,660	9%

 Please Note: If an employee knows they have a student loan, but not which Plan Type, select Plan Type 1 as a default. HMRC will correct this with an SL1/SL2 as appropriate.

 

National Minimum Wage (NMW) and National Living Wage (NLW)

The changes are as follows and apply from the pay period starting on or after 1st April 2023:

Age range	Old rate per hour	New rate per hour
Apprentice	£4.81	£5.28
16 to 17 years old	£4.81	£5.28
18 to 20 years old	£6.83	£7.49
21 to 22 years old	£9.18	£10.18
23 years old onwards (NLW)	£9.50	£10.42
Accommodation Offset	£8.70	£9.10

The current rates can also be found here - https://www.gov.uk/national-minimum-wage-rates

 

Statutory Payments

Statutory Sick Pay

Changes for the 2023/2024 tax year:

• The Statutory Sick Pay rate has increased from £99.35 per week to £109.40 per week

	Amount
Earnings Threshold	£123
Standard Rate (Per Week)	£109.40

 

The daily rate of SSP, determined by qualifying days is as follows:

Number of Qualifying Days in the 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
7	£15.63	£31.26	£46.89	£62.52	£78.14	£93.78	£109.40
6	£18.24	£36.47	£54.70	£72.94	£91.17	£109.40	N/A
5	£21.88	£43.76	£65.64	£87.52	£109.40	N/A	N/A
4	£27.35	£54.70	£82.05	£109.40	N/A	N/A	N/A
3	£36.47	£72.94	£109.40	N/A	N/A	N/A	N/A
2	£54.70	£109.40	N/A	N/A	N/A	N/A	N/A
1	£109.40	N/A	N/A	N/A	N/A	N/A	N/A

 

Statutory Parental Pay

Weekly rate of pay changes are effective from the 2nd of April 2023 for parental pay (1st Sunday of April 2023)

The reclaim rate for Parental Pay remains at 92%, or 103% for employers who qualify for Small Employers Relief.

Changes for the 2023/2024 tax year:

• The weekly rate of pay for all statutory parental payments has increased from £156.66 to £172.48

Parental Pay Type	Pay Amount
Statutory Adoption Pay (SAP) - first 6 Weeks	90% of Average Weekly Earnings
Statutory Adoption Pay (SAP) - remaining 33 Weeks	The lower of £172.48 per week or 90% of average weekly earnings
Statutory Maternity Pay (SMP) - first 6 Weeks	90% of Average Weekly Earnings
Statutory Maternity Pay (SMP) - remaining 33 Weeks	The lower of £172.48 per week or 90% of average weekly earnings
Statutory Paternity Pay	The lower of £172.48 per week or 90% of average weekly earnings
Statutory Shared Parental Pay	The lower of £172.48 per week or 90% of average weekly earnings
Statutory Bereavement Pay	The lower of £172.48 per week or 90% of average weekly earnings

Upon rolling over into the tax year 2023/2024, all Statutory Payment Schedules will be regenerated based on the above rates where applicable.

 

Pensions (Automatic Enrolment)

There are no changes for the 2023/2024 tax year.

Automatic Enrolment thresholds:

Threshold	Weekly	Fortnightly	Four-Weekly	Monthly
Lower level of qualifying earnings	£120	£240	£480	£520
Upper level of qualifying earnings	£967	£1,934	£3,867	£4,189
Earnings trigger for automatic enrolment	£192	£384	£768	£833

 

Automatic Enrolment minimum qualifying contribution rates:

Contribution Type	Minimum Rate
Employer Contribution	3%
Total Contribution	8%
Employee Contribution	The difference between employer and total contribution

For example:

Contribution Type	Percentage Spread
Employer Contribution	3%	4%	5%	6%	7%	8%
Employee Contribution	5%	4%	3%	2%	1%	0%
Total Contribution	8%

 

Certified Pension Scheme minimum rates:

Certification for Pensionable pay for
	Tier 1	Tier 2	Tier 3
Minimum Total Contributions	9%	8%	7%
Minimum Employer Contribution	4%	3%	3%
Required Member Contribution where Employer is minimum	5%	5%	4%

 Please Note: If you require any changes to your pension scheme’s default percentage rates because you have tier certification, please send details to your payroll specialist who will ensure the changes are made from the start of the new tax year.

Pension Diary:

The Pension Diary will automatically update to 2023/2024 when your portal is rolled forward into 2023/2024

 

Rolling the Portal Forward into the New Tax Year

To arrange for your portal to be rolled forward to the 2023/2024 tax year, your payroll specialist will contact you near the completion of your final pay run for the 2022/2023 tax year. When rolled forward, all rates, thresholds and allowances will automatically update for the 2023/2024 tax year.