Guidance

Software developers: PAYE update 22

Published 19 March 2018

The information in this update is taken from the:

• Autumn Budget Statement 22 November 2017
• Scottish Draft Budget 14 December 2017 (updated 31 January 2018)

1. Income Tax changes from 6 April 2018

• personal allowance (all age groups, for the whole of the UK) £11,850
• minimum amount of married couple’s allowance £3,360
• blind person’s allowance £2,390

The Income Tax rates, bandwidths and flat rate tax codes (where applicable) from 6 April 2018 are:

• basic rate 20% bandwidth £1 to £34,500 BR
• higher rate 40% bandwidth £34,501 to £150,000 D0
• additional rate 45% bandwidth £150,001 and above D1
• Scottish starter rate 19% bandwidth £1 to £2,000
• Scottish basic rate 20% bandwidth £2,001 to £12,150 SBR
• Scottish intermediate rate 21% bandwidth £12,151 to £31,580 SD0
• Scottish higher rate 41% bandwidth £31,581 to £150,000 SD1
• Scottish top rate 46% bandwidth £150,001 and above SD2

Revised payroll software must be used from 6 April 2018.

1.1 Changes in tax coding

There will be a general uplift of tax codes with suffixes ‘L’, ‘M’ and ‘N’. Full instructions will be issued to employers on form P9X(2018) ‘Tax codes to use from 6 April 2018’.

As a general rule, unless an amended code notification has been received on a form P9(T), employers should amend 2017 to 2018 tax codes as follows:

• ‘L’ suffix codes – increase by 35, for example code 1150L becomes 1185L
• ‘M’ suffix codes – increase by 39
• ‘N’ suffix codes – increase by 31
• the PAYE threshold from 6 April 2018 is raised to £228 per week (£988 per month)
• the code for emergency use from 6 April 2018 is 1185L

1.2 Changes to tax tables from 6 April 2018

The new Taxable Pay Tables (Tables B to D April 2018) are available in easy to print format so if you need a paper copy you can help us to keep costs down by printing one off.

These tables give the revised Income Tax rates and bandwidths, and are used from the first pay-day on or after 6 April 2018.

1.3 Specification for PAYE Tax Table Routines

The following changes were made to the parameter values in appendices A and B of the Specification for PAYE Tax Table Routines Version 16.1 (February 2018)

Appendix A: Parameter values from 6 April 2018.

B1 – bandwidth 1 0 unchanged
C1 – bandwidth 1 cumulative 0 unchanged
K1 – annual tax 1 cumulative 0 unchanged

B2 – bandwidth 2 changed to 34,500
C2 – bandwidth 2 cumulative changed to 34,500
K2 – annual tax 2 cumulative changed to 6,900

B3 – bandwidth 3 changed to 115,500
C3 – bandwidth 3 cumulative 150,000 unchanged
K3 – annual tax 3 cumulative changed to 53,100

R1 – rate 1 10% unchanged
R2 – rate 2 20% unchanged
R3 – rate 3 40% unchanged
R4 – rate 4 45% unchanged

G – Gpointer 2
M – Maxrate 50%

Appendix B: parameter values from 6 April 2018.

SB1 – bandwidth 1 changed to 2,000
SC1 – bandwidth 1 changed to 2,000
SK1 – annual Tax 1 changed to 380

SB2 – bandwidth 2 changed to 10,150
SC2 – bandwidth 2 cumulative changed to 12,150
SK2 – annual tax 2 cumulative changed to 2,410

SB3 – bandwidth 3 changed to 19,430
SC3 – bandwidth 3 changed to 31,580
SK3 – annual tax 3 cumulative changed to 6,490.30

SB4 – bandwidth 4 118,420 (new parameter)
SC4 – bandwidth 4 150,000 (new parameter)
SK4 – annual tax 4 55,042.50 (new parameter)

SR1 – rate 1 changed to 19%
SR2 – rate 2 20% unchanged
SR3 – rate 3 changed to 21%
SR4 – rate 4 changed to 41%
SR5 – rate 5 46% (new parameter)

G1 – Gpointer 2
M – Maxrate 50.00%

1.4 Payroll Test Data

The Software developers: payroll test data has been updated.

2. Class 1 National Insurance contributions (NICs) changes from 6 April 2018

In the Autumn Budget on 22 November 2017 the Chancellor announced the following 2018 to 2019 Class 1 NICs limits:

• Lower Earnings Limit £116 a week
• Primary Threshold £162 a week
• Secondary Threshold £162 a week
• Upper Earnings Limit £892 a week
• Upper Secondary Threshold £892 a week
• Apprentice Upper Secondary Threshold £892 a week

2.1 National Insurance earnings limits, thresholds and rates

Class 1 NICs rates 2018 to 2019

2.2 National Insurance guidance for software developers

This technical specification has been updated for the 2018 to 2019 tax year.

2.3 National Insurance employment allowance

For 2018 to 2019 the employment allowance, which many employers are eligible to claim where they have a secondary Class 1 NICs liability, will remain at £3,000.