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Allowances 17/18
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Allowances 17/18
Allowances 17/18

If you are new to payroll or employing someone for the first time or if circumstances change during the year, the following guide may be of use to you. Here is our summary of the main things that you need to know.

Rates and thresholds for the current tax year

Tax code and tax free allowances

The most common tax code currently is 1150L (S1150L in Scotland), meaning that the tax free personal allowance is £11,500. 

This works out as £221 per week or £958 per month. If an employee starts a job mid-way through the year or works hours that are not constant however they may be allocated more of the tax-free allowance in a given week or month, i.e. it is ‘cumulative’ – so it’s the annual figure that is most important.

 

National Insurance Contribution (NIC) thresholds

For both employers and employees, the thresholds are now £157 weekly, £680 monthly and £8,164 annually.

If you employ an apprentice under the age of 25 or anyone under 21 years of age then no employer NICs are payable for these (up to the Upper Earnings Limit - UEL).

 

National Insurance rates

Employees NIC rates are 12% up to £866 weekly / £3,750 monthly / £45,000 per annum then 2% for earnings above this.

Employers NICs are 13.8% on all earnings above the threshold, with an employer allowance of £3,000 per year.

 

Statutory Sick Pay (SSP)

The lower earnings limit for calculation of SSP is £113 per week.

The SSP amount is £89.35.

Statutory Maternity Pay (SMP) / Statutory Adoption Pay (SAP) / Ordinary Statutory Paternity Pay (OSPP) and Additional Statutory Paternity Pay (ASPP).

All of these have a lower earnings limit of £113 per week.

The standard rate is £140.98 per week.

SMP is for 39 weeks, the first six weeks at 90% or £140.98 (whichever is lower).

Employers can claim back at least 92% of SMP, Paternity, Adoption and Shared Parental Pay and this is done through your usual payroll software. If your business qualifies for ‘Small Employers’ Relief) the amount reclaimable rises to 103%.

This applies if you paid £45,000 or less in Class 1 National Insurance (ignoring reductions like Employment Allowance) in the last full tax year before the qualifying week / matching week / official notification.

 

Student loans

The deduction rate is 9%. There are two thresholds above which deductions are required, depending upon whether the student is on Plan 1 or Plan 2:

Plan 1: £17,775 per annum / £1,481 per month / £341 per week.

Plan 2: £21,000 per annum / £1,750 per month / £403 per week.

 

National Minimum Wage (from 1st April 2017)

Whilst the term ‘National Living Wage’ has been adopted by the current government, it is essentially a new Minimum Wage and does not necessarily match with the Living Wage which pre-dates this and is not statutory.

The minimum rates of pay currently (from 1st April 2017) are:

  • Apprentices under 19 years of age or older than this but in year 1 of an apprenticeship: £3.50 per hour.
  • Aged 16 or 17: £4.05
  • Aged 18 – 20: £5.60
  • Aged 21 – 24: £7.05
  • Aged 25 or over: £7.50

 

Income Tax rates

The new NI Prefix is KC.

 

UK rates (except Scotland)

Basic rate: 20% - applies to income from £1 to £33,500 (after the tax free personal allowance of £11,500 has been allocated).

Higher rate: 40% - applies to income from £33,501 to £150,000.

Additional rate: 45% - applies to income above £150,000.

 

Scottish rates

In Scotland, the rates are the same but the income bandings to which they apply are slightly different:

Basic rate applies to income up to £31,930. Higher rate applies to income above this up to £150,000 and the additional rate applies as it does in the rest of the UK.

 

 

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DCS Sunderland  T: 0191 514 7009  E: payinfo@dcspayroll.co.uk
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