2023 UK Payroll changes
It’s almost April 6th, and that means new UK tax laws and regulations are on the way in the UK. But don’t worry, we’ve got your back! We’ve compiled a list of the most significant changes we’ve heard about so far to help you prepare for the upcoming tax year.
National Living Wage and National Minimum Wage rates confirmed
One big change is that the National Living Wage (NLW) and the National Minimum Wage (NMW) are going up in April 2023.
Rate from April 2023 | Current rate (April 2022 to March 2023) | Increase | |
National Living Wage (23 Year Old and over) | £10.42 | £9.50 | 9.7% |
21-22 Year Old Rate | £10.18 | £9.18 | 10.9% |
18-20 Year Old Rate | £7.49 | £6.83 | 9.7% |
16-17 Year Old Rate | £5.28 | £4.81 | 9.7% |
Apprentice Rate | £5.28 | £4.81 | 9.7% |
Accommodation Offset | £9.10 | £8.70 | 4.6% |
Every paycheck must follow the NLW/NMW standard, so workers must be paid at least the minimum wage for the hours they work, whether they get paid weekly or every two weeks. And any earnings above the minimum wage in one pay period can’t be used to make up for pay below the minimum wage in the following period.
It’s also worth noting that the accommodation allowance is just for covering the cost of lodging, and that only housing expenses can reduce the average wage below the legally required minimum. So things like utilities, local taxes, employee uniforms, equipment, and other expenses can’t be deducted.
Other statutory rates from April 2023
Another UK payroll change is that, from 2023, the weekly rates of other statutory parental benefits like maternity, paternity, adoption, shared parental, and parental bereavement pay, which will now be £172.48. Statutory sick pay (SSP) will be paid at a rate of £109.40 per week.
When the Health and Social Care Levy is repealed, national insurance premiums will go back to their pre-levy levels.
There were some “hybrid” rates at the end of 2022/2023 due to the midyear adjustment to national insurance rates, so national insurance payments wouldn’t be double-counted.
These changes will impact directors, Class 1A on benefits, and Class 1B on benefits, as well as P11D(b) expenses and PSA expenses. For example, directors who use the cumulative method to determine their national insurance will have 14.53 percent of their income above the primary threshold taxed as such.
But there’s some good news too! With the repeal of the health and social care levy, national insurance rates and the resulting cumulative NI rates have gone back to their pre-levy levels. Class 1A and Class 1B NI rates are back to 13.8%, and the rate for directors is the same as it is for employees.
Talk to one of our specialists today if you’re wanting to find
out more about how Agility EOR can ensure your employees in the UK are paid
compliantly each month.
Download our full UK employment guide to find out everything you need to know about employing in the UK.
Scott Winter
HR Director
