Payroll Highlights for April 2023
There are a few changes arriving in April but so far no big announcements and hopefully some stability for next year. The National Minimum Wage sees a dramatic increase, there are some changes with the tax bands, pensions remain the same as the current year and student loan thresholds are moving slightly. Here are some payroll highlights for April 2023:
National Minimum Wage
The new National Minimum Wage rates increase between 9.7% and 10.9% and come into force in April 2023. The rates from April are as follows:
| Aged 23 and over (National Living Wage) | £10.42 |
|---|---|
| Aged 21 – 22 | £10.18 |
| Aged 18 – 20 | £7.49 |
| Under 18 | £5.28 |
| Apprentice | £5.28 |
Student Loans
The Student Loan deduction rates remain the same at 9% for loans 1,2 and 4 and the postgraduate rate is still 6%. The student loan threshold is the point at which student loan deductions start, annual rates are given but can be divided by the number of the pay days in the year to give the pay period threshold eg divide by 12 for a monthly payroll.
Student Loan calculations are made against pay subject to National Insurance.
The annual thresholds are as follows:
| Student Loan 1 (9%) | £22,015 | previously £20,195 |
|---|---|---|
| Student Loan 2 (9%) | £27,295 | unchanged |
| Student Loan 4 (9%) | £27,660 | previously £25,375 |
| Postgraduate Loan (6%) | £21,000 | unchanged |
Pensions
The Auto-enrolment pension thresholds remain unchanged for the April 2023 tax year. The thresholds are annual amounts but again divide by the number of pay days in the year to get the period amount, so by 12 for a monthly payroll for instance.
Annual thresholds:
| Trigger to be automatically enrolled | £10 000 |
|---|---|
| Lower Limit Qualifying Earnings band | £6 240 |
| Upper Limit Qualifying Earnings band | £50 270 |
Tax Thresholds
Many of the tax thresholds remain the same and the rates are largely unaffected. Scotland have a few more changes than the rest of the UK but even then there are rates and thresholds unchanged. National Insurance is not changing in the 2023 tax year, probably….
From April 2023 we expect the following rates:
| Tax Free Allowance | £12 700 | unchanged |
England, Wales and Northern Ireland
| Basic Rate (20%) | £12 571 – £50 270 | unchanged |
|---|---|---|
| Higher Rate (40%) | £50 271 – £125 140 | lower upper band |
| Additional Rate Threshold (45%) | above £125 140 | reduced from £150 000 |
Note: when earnings are above £100 000 the personal allowance is tapered, reducing by £1 for every £2 over £100 000.
Scotland
| Starter Rate (19%) | £12 571 – £14 732 | unchanged |
|---|---|---|
| Scottish Basic Rate (20%) | £14 733 – £25 688 | unchanged |
| Intermediate Rate (21%) | £25 689 – £43 662 | unchanged |
| Higher Rate (42%) | £43 663 – £125 140 | increased rate (was 41%) and lower upper band |
| Top Rate (47%) | above £125 140 | increased rate (was 46%) and reduced from £150 000 |
Note: when earnings are above £100 000 the personal allowance is tapered, reducing by £1 for every £2 over £100 000.