Resource 1

Income Tax Rates and Allowances

Basic Tax

Rates and thresholds for employers: 2018 to 2019

Use these rates and thresholds when you operate your payroll or provide expenses and benefits to your employees.

Unless otherwise stated, these figures apply from 6 April 2018 to 5 April 2019.

Paye Tax and Class 1 National Insurance Contributions

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

Your payroll software will calculate how much tax and National Insurance to deduct from your employees’ pay.

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.

There are different rates for Scotland.

PAYE tax rates and thresholds2018 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

Scotland

PAYE tax rates and thresholds

2018 to 2019

Employee personal allowance

£228 per week

£988 per month

£11,850 per year

Scottish starter tax rate

19% on annual earnings above the PAYE tax threshold and up to £2,000

Scottish basic tax rate

20% on annual earnings from £2,001 to £12,150

Scottish intermediate tax rate

21% on annual earnings from £12,151 to £31,580

Scottish higher tax rate

41% on annual earnings from £31,581 to £150,000

Scottish top tax rate

46% on annual earnings above £150,000

Emergency tax codes

The emergency tax codes from 6 April 2018 are:

  • 1185L W1
  • 1185L M1
  • 1185L X

Find out more about emergency tax codes.

National Minimum Wage

The National Minimum Wage is the minimum pay per hour almost all workersare entitled to by law. 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.

The rates below apply from 1 April 2018.

Category of workerHourly 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

Use the maternity and paternity calculator for employers to calculate your employee’s Statutory Maternity Pay (SMP), paternity or adoption pay, their qualifying week, average weekly earnings and leave period.

Type of payment or recovery2018 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 (SSP)

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.

Use the SSP calculator to work out your employee’s sick pay, or use the rates below.

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Unrounded daily ratesNumber of QDs in week1 day to pay2 days to pay3 days to pay4 days to pay5 days to pay6 days to pay7 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 threshold2018 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%

Company Cars: Advisory Fuel Rates (AFRS)

Use AFRs to work out mileage costs if you provide company cars to your employees.

The rates below apply from 1 June 2018.

Engine sizePetrol - amount per mileLPG - amount per mile

1400cc or less

11 pence

7 pence

1401cc to 2000cc

14 pence

9 pence

Over 2000cc

22 pence

14 pence

Engine sizeDiesel - amount per mile

1600cc or less

10 pence

1601cc to 2000cc

11 pence

Over 2000cc

13 pence

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

Employee Vehicles: 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 vehicleRate 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