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 worker | Hourly 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 rate | Rate of tax | Annual earnings the rate applies to (above the PAYE threshold) |
| Basic tax rate | 20% | Up to £37,700 |
| Higher tax rate | 40% | From £37,701 to £125,140 |
| Additional tax rate | 45% | Above £125,140 |
Scotland
| PAYE tax rate | Rate of tax | Annual earnings the rate applies to (above the PAYE threshold) |
| Starter tax rate | 19% | Up to £2,162 |
| Basic tax rate | 20% | From £2,163 to £13,118 |
| Intermediate tax rate | 21% | From £13,119 to £31,092 |
| Higher tax rate | 42% | From £31,093 to £125,140 |
| Top tax rate | 47% | Above £125,140 |
Class 1 National Insurance thresholds
| Employee NI Contribution | 0% | Up to £1,048 per month |
| 12% | From £1,049 to £4,189 per month | |
| 2% | Above £4,189 per month |
| Employer NI Contribution | 0% | 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.
| Allowance | 2023 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)
