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Employers’ newsletter - Rates and allowances

The hourly rate for minimum wage depends on your age and whether or not you are an apprentice. For the 2018/19 and 2019/20 tax years, the following rates apply:

Year 25 and over 21-24 18-20 Under 18 Apprentice
2018/19

£7.83

£7.38

£5.90

£4.20

£3.70

2019/20

£8.21

£7.70

£6.15

£4.35

£3.90

In order to receive the national minimum wage, you must be at least 16 years of age. Those who are entitled to receive the national minimum wage, include, part-time workers, apprentices, disabled workers and offshore workers. Those who are not entitled to receive minimum wage, include, self-employed individuals, company directors, volunteers, workers on a government employment programme, members of the armed forces, workers younger than 16 and, people living and working in a religious community.

To receive the national living wage, you need to be at least 25 years of age.

Personal Allowances Rates and thresholds

For the current tax year the personal allowance is £11,850. (This may be increased if you also claim marriage allowance or blind person’s allowance.) Where income is over £100,000, the personal allowance is reduced by £1 for every £2 over this threshold, and where the income exceeds £123,700, your personal allowance is reduced to nil.  The basic rate for the current tax year is between £11,851 (the personal allowance) to £46,350. Any income which falls within this rate is taxed at 20%. Income between £46,351 to £150,000 is taxed at the higher rate of 40%. Any income over £150,000 is taxed at the additional rate of 45%.

The personal allowance for the 2019/20 tax year will be increased to £12,500, with the following tax rates:

  • The basic rate of 20% being between £12,501 to £50,000.
  • Any income from £50,001 to £150,000 will be taxed at 40%.
  • Any income over £150,000 will be taxed at 45%.

National Insurance rates and thresholds 

The rate for National Insurance contributions for the 2018/19 tax year are as follows:

Class 1 National Insurance thresholds:

  • LEL (Lower Earnings Limit) - £116 p/w, £503 p/m, £6,032 p/y.
  • Primary Threshold (PT) - £162 p/w, £702 p/m, £8,424 p/y.
  • Secondary Threshold (ST) - £162 p/w, £702 p/m, £8,424 p/y.Upper Secondary Threshold (Under 21) - £892 p/w, £3,863 p/m, £46,350 p/y.
  • Apprentice Upper Secondary Threshold (apprentice under 25) (AUST) –
  • £892 p/w, £3,863 p/m, £46,350 p/y.
  • Upper Earnings Limit (UEL) – As above
  • £892 p/w, £3,863 p/m, £46,350 p/y.

Class 1 National Insurance rates for 2018/19 (employee primary contribution rates):

National Insurance Category Letter

Earnings at or above LEL up to and including PT

Earnings above the PT up to and including UEL

Balance of earnings above UEL

A

0%

12%

2%

B

0%

5.85%

2%

C Nil Nil Nil
H - apprentice under 25

0%

12%

2%

J

0%

2%

2%

M (under 21)

0%

12%

2%

Z (under 21-deferment)

0%

2%

2%

Employer (secondary) contribution rates:

National Insurance Category Letter

Earnings at or above LEL up to and including PT

Earnings above the PT up to and including UEL/UST/AUST

Balance of earnings above UEL/UST/AUST

A 0%

13.80%

13.80%

B 0%

13.80%

13.80%

C 0%

13.80%

13.80%

H – Apprentice Under 25

0%

0%

13.80%

J 0%

13.80%

13.80%

M (under 21) 0%

0%

13.80%

Z (Under 21-deferment)

0%

0%

13.80%

National Insurance rates and thresholds for 2019/20:

Class 1 National Insurance thresholds-

  • LEL - £118 p/w, £512 p/m, £6,136 p/y.
  • Primary threshold - £116 p/w, £719 p/m, £8,632 p/y
  • Secondary threshold - £166 p/w, £719 p/m, £8,632 p/y
  • Upper secondary threshold (under 21) - £962 p/w, £4,167 p/m, £50,000 p/y
  • Apprentice upper secondary threshold (apprentice under 25, AUST) – £962 p/w, £4,167 p/m, £50,000 p/y
  • Upper earnings limit – £962 p/w, £4,167 p/m, £50,000 p/y The employee primary contributions, and employer secondary contribution rates remain the same for 2019/20.

If you require any clarification on rates and allowances in relation to your circumstances, please get in touch.

 

 

Date: 27th March, 2019
Author: Jacqui Gudgion

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