Happy New Tax Year! - Important updates for the 2023/24 Tax Year

In this blog, we prepared a summary about the changes for the 2023/24 Tax Year.

The National Minimum Wage will increase from the 1st of April 2023 as follows:

Category of workerHourly rate
Aged 23 and above (national living wage rate)£10.42
Aged 21 to 22 inclusive£10.18
Aged 18 to 20 inclusive£7.49
Aged under 18 (but above compulsory school leaving age)£5.28
Apprentices aged under 19£5.28
Apprentices aged 19 and over, but in the first year of their apprenticeship£5.28

Tax thresholds, rates and codes

The standard employee personal allowance for the 2023 to 2024 tax year is:

  • £242 per week
  • £1,048 per month
  • £12,570 per year

Above that limit, the Tax Rates are as follows:

England, Wales and Northern Ireland

PAYE tax rateRate of taxAnnual earnings the rate applies to (above the PAYE threshold)
Basic tax rate20%Up to £37,700
Higher tax rate40%From £37,701 to £125,140
Additional tax rate45%Above £125,140

Scotland

PAYE tax rateRate of taxAnnual earnings the rate applies to (above the PAYE threshold)
Starter tax rate19%Up to £2,162
Basic tax rate20%From £2,163 to £13,118
Intermediate tax rate21%From £13,119 to £31,092
Higher tax rate42%From £31,093 to £125,140
Top tax rate47%Above £125,140

Class 1 National Insurance thresholds

Employee NI Contribution0%Up to £1,048 per month
12%From £1,049 to £4,189 per month
2%Above £4,189 per month

 

Employer NI Contribution0%Up to £758 per month
13.8%From £758 per month

 

Employment Allowance

Employment Allowance allows employers to reduce their annual National Insurance liability by up to the annual allowance amount if the total employers’ Class 1 National Insurance liabilities is less than £100,000 and there are at least one more Employee or paid Director on payroll apart from the sole Director.

Allowance2023 to 2024 rate
Employment Allowance£5,000

Self-employed: Class 2 National Insurance

Class 2 contributions are how the self-employed build up entitlement to the state pension. For 2023/24, Class 2 contributions are payable at £3.45 per week where profits exceed £6,725 per year.

Where profits are below that Class 2 contributions can be paid voluntarily.

Self-employed: Class 4 National Insurance

The self-employed also pay Class 4 contributions on their profits. These contributions do not secure any benefit entitlement and are more akin to a tax.

For 2023/24, Class 4 contributions are payable at the main rate of 9% where profits are between £12,570 and £50,270, and at the additional Class 4 rate of 2% on profits above £50,270 per year.

Both the Class 2 and Class 4 National Insurance are payable once in the year with the annual tax liability included in the Self Assessment Tax Return for 2023/24.

The dividend tax rates in 2023/24

This year the dividend tax rates are:

  • - 0% on the first £1,000 from dividends (this is called the Dividend Allowance)
  • - 0% if your total income is under the Personal Allowance (£12,570)
  • - 8.75% if you’re a basic rate taxpayer (up to £50,270 combined income)
  • - 33.75% if you’re a higher rate taxpayer (only for the part goes over the £50,270 limit)
  • - 39.35% if you’re an additional rate taxpayer (above £125,140 - at this point you also lose your Personal Allowance as the income is over £100,000)