UK Payroll Processing Guide for Tax Year 2023-2024: Key Changes and Dates

Before we dive into the legislative changes, it's essential to highlight some critical dates that payroll managers must be aware of. These include:

• April 6th, 2023: This marks the start of the new tax year, and all new tax codes and rates will come into effect.
• May 31st, 2023: This is the deadline for submitting your employer annual return (P35 and P14s) for the tax year 2022-2023.
• July 6th, 2023: This is the deadline for submitting forms P11D, P11D(b), and P9D for the tax year 2022-2023.
• July 21st, 2023: This is the deadline for paying any Class 1A National Insurance contributions electronically for the tax year 2022-2023.

For pay periods commencing from April 1st, 2023, the National Minimum Wage (NMW) increase across all age bands. The new rates will be as follows:

• £10.42 per hour for workers aged 23 and over (up from £9.50 in the previous tax year).
• £10.18 per hour for workers aged 21 to 22 (up from £9.18 in the previous tax year).
• £7.49 per hour for workers aged 18 to 20 (up from £6.83in the previous tax year).
• £5.28 per hour for workers aged 16 to 17 (up from £4.82 in the previous tax year).
• £5.28 per hour for apprentices (up from £4.81 in the previous tax year).

Employers must ensure that they pay their workers the correct NMW rate, or they risk facing penalties and fines from HM Revenue and Customs (HMRC).

It is the government’s intention to lower the age threshold for the National Living Wage (NLW) from 23 to 21 by 2024. This means that more workers will be eligible for the higher wage rate, and payroll managers will need to be prepared for this change when it comes into effect.

Income Tax for England and Northern Ireland

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

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

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

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

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

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

The emergency tax codes from 6 April 2023 are:

• 1257L W1
• 1257L M1
• 1257L X

The primary threshold for Class 1 National Insurance contributions (NICs) is frozen at £12,570. The secondary threshold is frozen at £9,100.

The upper earnings limit remains frozen at £50,270

Student Loans:

Some of the thresholds for student loan repayments increase:

• Plan 1: £22,015 (increased from £20,195)
• Plan 2: £27,295 (frozen)
• Postgraduate: £21,000 (frozen)
• Plan 4 (Scotland): £27,660 (increased from £25,375)

Pensions:

Employers must contribute a minimum of 3% banded earnings towards an employee's workplace pension scheme, while employees must contribute the remainder to meet an 8% total contribution (this is a minimum, scheme rules may require a higher value). If an employer pays the minimum 3%, this will be 5%, but the amount could be lower if an employer pays a higher percentage.

Employers must also be aware of their automatic enrolment duties, which require them to automatically enrol eligible employees into a workplace pension scheme and contribute towards it. It's important to ensure that these duties are met to avoid any penalties from The Pensions Regulator.

Form P11D is used to report expenses and benefits that employees have received during the tax year. From April 6th, 2023 P11Ds must be filed electronically.

It's essential to ensure that all expenses and benefits are accurately reported on Form P11D to avoid any potential penalties from HMRC.

The Scottish Parliament have implemented an uprate the earnings arrestment tables from 6th April 2023.

These tables were last uprated in April 2022 and are normally uprated every three years.

However, given the current rate of inflation and current cost crisis, the Scottish Government were keen to conduct a further uprating to provide some additional financial resilience to those subject to an earnings arrestment.

As the tax year 2023-2024 approaches, UK-based payroll professionals must be aware of the changes and new legislation that will impact their payroll processing. From changes to National Minimum Wage to updates in Income Tax and National Insurance Contributions, there's a lot to keep track of. By understanding these changes and their impact on payroll processing, payroll managers can ensure compliance with the latest laws and avoid potential fines and penalties from HMRC.

By staying up-to-date and proactive in their payroll processing, UK-based payroll professionals can ensure the smooth and efficient operation of their payroll department. It's essential to keep track of key dates and deadlines, stay informed of changes to legislation and regulations, and ensure accurate reporting of expenses and benefits.

Payroll is a critical function of any business, and it's important to get it right. By staying on top of these changes and working closely with HMRC, payroll managers can ensure that their business remains compliant and successful in the years to come.

1. The new tax year in the UK starts on April 6th, 2023.
2. Employers must be aware of important dates, such as the May 31st deadline for submitting the employer annual return and the July 6th deadline for submitting forms P11D, P11D(b), and P9D.
3. The National Minimum Wage will increase for pay periods which commence from April 1st, 2023, with rates varying by age band.
4. The Personal Allowance for income tax is frozen as £12,570 for the tax year 2023-2024.
5. The primary and secondary thresholds for Class 1 National Insurance contributions remain frozen, as will the upper earnings limit for Class 1 NICs.
6. The threshold for student loan repayments increased for both Plan 1 and Plan 4 loans.
7. Employers must contribute a minimum of 3% banded earnings towards an employee's workplace pension scheme, while employees must contribute the remainder to meet an 8% total contribution (this is a minimum, scheme rules may require a higher value). If an employer pays the minimum 3%, this will be 5%, but the amount could be lower if an employer pays a higher percentage.
8. Employers must be aware of their automatic enrolment duties including tri-ennial re-enrolment duties..
9. Form P11D must now be submitted eletronically.
10. By staying up-to-date and proactive in their payroll processing, payroll managers can ensure the smooth and efficient operation of their payroll department and avoid penalties from HMRC.