6 April is fast approaching – and that means that payroll professionals are gearing up for tax year end. It’s one of the busiest times of the year, and every minute is precious right now. So why don’t we save you some time by giving you the lowdown on the legislative and regulatory changes for the 2024/25 tax year? That way you can focus on what really matters: getting your people paid.
Payroll changes 2024/25: what you need to know
We’ve got the roundup of payroll changes 2023/24 – from tax thresholds to company car rates – in our guide below.
Prefer a proper teaching session? We’ve got you. Watch the webinar below, hosted by our resident payroll guru Jaspal Randhawa, director of product – payroll, compliance and data.
Quick links
- Tax thresholds
- Scottish tax thresholds
- National Insurance thresholds
- Statutory Sick Pay (SSP)
- Other statutory payments and deductions
- The Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations 2024
- National Living and Minimum Wage rates
- Regulation 57 changes
- Real Living Wage
- Company car rates
- Holiday pay changes
- Employment (Allocation of Tips) Act
- Right to work fines
Tax thresholds
UK (including Welsh and excluding Scottish) tax thresholds are as follows:
| Taxable earnings banding from | Taxable earnings banding to | Tax payable | |
| Basic | £1 | £37,700 | 20% |
| Higher | £37,701 | £125,140 | 40% |
| Additional | Above £125,140 | Unlimited | 45% |
There’ll be no change to the standard tax code (1257L). You should also keep these other thresholds in mind:
- Personal Allowance: £12,570 (frozen until 2027/28)
- Personal Allowance income limit: £100,000
- Married Couple’s Allowance income limit: £37,000 (previously £34,600)
Scottish tax thresholds
Scottish tax thresholds differ from the rest of the UK. They are as follows:
| Taxable earnings banding from | Taxable earnings banding to | Tax payable | |
| Personal allowance | £0 | £12,570 | 0% |
| Starter | £12,571 | £14,876 | 19% |
| Basic | £14,877 | £26,561 | 20% |
| Intermediate | £26,562 | £43,662 | 21% |
| Higher | £43,663 | £75,000 | 42% |
| Advanced | £75,001 | £125,140 | 45% |
| Top | Above £125,141 | Unlimited | 48% |
The starter, intermediate and higher rates will remain the same as last year. The top rate will increase by 1p up to 48% for those earning over £125,140 per year.
The bands are where we’ll see the major changes. A new band, the advanced rate, will apply to those earning between £62,430 (£75,000 when factoring in the personal allowance) and £125,140 in taxable income.
The basic band and intermediate band will increase by inflationary figures to apply to those earning £14,877 and £26,562 respectively. The starting income of the higher and top bands remains the same.
National Insurance thresholds
Other types of employee thresholds for 2024/25 include:
- Upper Secondary Threshold (employees under 21 and apprentices under 25): £967 per week/£4,189 per month/£50,270 per year
- Veterans' Upper Secondary Threshold: £967 per week/£4,189 per month/£50,270 per year
- Freeport Upper Secondary Threshold: £481 per week/£2,083 per month/£25,000 per year
- Investment Zones Upper Secondary Threshold: £481 per week/£2,083 per month/£25,000 per year
| Employee rate | Band | Earnings per week/month/year | Employer rate |
| 0% | LEL |
Up to: |
0% |
| 0% | LEL-PT | £123 to £242 per week £533 to £1,048 per month £6,396 to £12,570 per year |
N/A |
| 8% | PT-UEL | £242 to £967 per week £1,048 to £4,189 per month £12,570 to £50,270 per year |
N/A |
| N/A | LEL-ST | £123 to £175 per week £533 to £758 per month £6,396 to £9,100 per year |
0% |
| N/A | ST-UEL | £175 to £967 per week £758 to £4,189 per month £9,100 to £50,270 per year |
13.8% |
| 2% | UEL+ | Over: £967 per week £4,189 per month £50,270 per year |
13.8% |
Statutory Sick Pay (SSP)
The SSP is as follows:
| Daily rates | Days in week | 1 day to pay | 2 days to pay | 3 days to pay | 4 days to pay | 5 days to pay | 6 days to pay | 7 days to pay |
| £16.678 | 7 | £16.68 | £33.36 | £50.04 | £66.71 | £83.39 | £100.07 | £116.75 |
| £19.458 | 6 | £19.46 | £38.92 | £58.38 | £77.83 | £97.29 | £116.75 | |
| £23.350 | 5 | £23.35 | £46.70 | £70.05 | £93.40 | £116.75 | ||
| £29.187 | 4 | £29.19 | £58.38 | £87.56 | £116.75 | |||
| £38.916 | 3 | £38.92 | £77.83 | £116.75 | ||||
| £58.375 | 2 | £58.38 | £116.75 | |||||
| £116.750 | 1 | £116.75 |
Table created by the CIPP
Other statutory payments and deductions
The following applies from Sunday 7 April 2024:
| Payment type | Rate |
| Statutory maternity pay** | £184.03* |
| Statutory paternity pay | £184.03* |
| Statutory adoption pay** | £184.03* |
| Statutory shared parental pay | £184.03* |
| Statutory parental bereavement pay | £184.03* |
| Loan type | Annual threshold | Rate |
| Plan 1 | £24,990 | 9% |
| Plan 2 | £27,295 | 9% |
| Postgraduate | £21,000 | 9% |
| Plan 4 | £31,395 | 9% |
| Plan 5 | £25,000 | 9% |
Plan 5 is for new students from September 2023, processing from April 2026.
The Maternity Leave, Adoption Leave and Shared Parental Leave (Amendment) Regulations 2024
Redundancy protections are in place for pregnant women and those on maternity, adoption or shared parental leave. If protections are not given under other statutory leave, qualifying leave is 18 months from:
- The estimated week of childbirth
- The actual birth date
- The placement date
- The start of shared leave
Protection finishes two weeks after pregnancy if the employee doesn’t qualify for statutory maternity leave.
National Living and Minimum Wage rates
The National Living and Minimum Wage increases on 1 April 2024 for the eligible workers in the UK, including apprentices.
From 1 April 2024, workers 21 and older will be entitled to the National Living Wage. It’ll increase by 9.8% to £11.44 per hour. Previously, the National Living Wage was only available for those aged 23 and over.
The National Minimum Wage will be £8.60 per hour for those aged 18-20 and £6.40 for those under 18.
The apprentice rate will be £6.40 per hour for apprentices under 19 or over 19 in the first year of their apprenticeship.
Regulation 57 changes
From April 2024, paragraph three from regulation 57 will be removed from the National Minimum Wage Regulations 2015. This removal changes the exemption for the definition of work when the work relates to a family household.
Real Living Wage
Real Living Wage is set by the Living Wage Foundation and applies to anyone aged 18 or over. New rates were announced on 24 October 2023:
- UK Living Wage: £12 per hour
- London Living Wage: £13.15 per hour
Employees should receive the new rate by 1 May 2024.
Company car rates
There are no changes to company car tax rates.
Electric company car tax rates are limited to one percentage point increase per year for three years, from 2025 to 2028.
The set maximum is 5% for electric cars and 21% for ultra-low emission vehicles (vehicles that emit 75g or less of CO2/km).
All other vehicle bands increase by one percentage point for 2025/26, up to a maximum of 37%. This’ll then be fixed in 2026/27 and 2027/28.
In 2024/25 the car and van fuel benefit charges and van benefit charges increase in line with inflation.
Holiday pay changes
Irregular hours and part-time workers
The reference period for calculating holiday pay for workers with irregular hours will change from 12 weeks to 52 weeks. This change will come into effect 6 April 2024. These changes don’t affect how holiday entitlement should be calculated for regular hour workers or employees.
Holiday pay can be calculated via the 12.07% accrual method for irregular hours and part-time workers only. This means rolled-up holiday pay is no longer unlawful for irregular hours workers and part-year workers.
For more information on the changes, read guidance from the Department of Business and Trade on holiday pay and entitlement reforms and GOV.UK on holiday entitlement for irregular or part-time workers.
Underpaid holiday pay
A Supreme Court ruling (Chief Constable of the Police Service of Northern Ireland v Agnew) means that employees can claim for historic underpayments of holiday pay, even where there are gaps of more than three months between deductions. Read insight on the ruling from law firm Lewis Silkin.
Employment (Allocation of Tips) Act
Employers must ensure all tips, gratuities and service charges are allocated fairly and transparently between their workers. 100% of tips and service charges must be distributed to staff (subject to tax deductions).
Payments of tips and service charges must be paid by the end of the following month that they are given by the consumer.
Distributing tips fairly does not necessarily require employers to allocate the same proportion of tips to all workers. If employers decide to allocate tips in different proportions, they should use a clear and objective set of factors to justify this.
The new legislation is expected to come into force on 1 July 2024.
Right to work fines
If you’re an organisation without substantial right-to-work (RTW) checks in place you should take note. Illegal working fines will triple to £45,000 per worker for first breaches and £60,000 per worker for repeat breaches in the UK.
A draft code suggests that all right-to-work checks must include either a manual check, a check using Identity Document Validation Technology (IDVT) or an online check.
This change came into force on 22 January 2024.
If you’re worried about your RTW checks, we can help. Our HR software integrates with TrustID, a leading digital ID service provider (IDSP), to make pre-employment checks a breeze. Shoot us a message for more details.
Get payroll peace of mind
Phew – that’s a lot to take in. We wouldn’t blame you if you bookmarked this blog post to refer back to! Anything you give you payroll peace of mind.
And speaking of payroll peace of mind – we know that’s what you want to give to your people. After all, they rely on you to be accurately paid on time, every time. We can help with that – we’ve got payroll software you can trust. Our solutions are made to fit your unique needs, whether that’s outsourced payroll or payroll bureau services.
Further reading: Tax year 2024/25 guide