Guidance

Rates and thresholds for employers 2020 to 2021

Use these rates and thresholds when you operate your payroll or provide expenses and benefits to your employees.

Unless otherwise stated, these figures apply from 6 April 2020 to 5 April 2021.

PAYE tax and Class 1 National Insurance contributions

You normally operate PAYE as part of your payroll so HMRC can collect Income Tax and National Insurance from your employees.

Your payroll software will calculate how much tax and National Insurance to deduct from your employees’ pay.

Tax thresholds, rates and codes

The amount of Income Tax you deduct from your employees depends on their tax code and how much of their taxable income is above their Personal Allowance.

England and Northern Ireland

PAYE tax rates and thresholds 2020 to 2021
Employee personal allowance £240 per week
£1,042 per month
£12,500 per year
English and Northern Irish basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,500
English and Northern Irish higher tax rate 40% on annual earnings from £37,501 to £150,000
English and Northern Irish additional tax rate 45% on annual earnings above £150,000

Scotland

PAYE tax rates and thresholds are effective from 6 April 2020. Following recent Scottish Parliamentary approval, 2019 to 2020 rates will remain operative until 10 May 2020 which will then be superseded by the rates shown below.

PAYE tax rates and thresholds 2020 to 2021
Employee personal allowance £240 per week
£1,042 per month
£12,500 per year
Scottish starter tax rate 19% on annual earnings above the PAYE tax threshold and up to £2,085
Scottish basic tax rate 20% on annual earnings from £2,086 to £12,658
Scottish intermediate tax rate 21% on annual earnings from £12,659 to £30,930
Scottish higher tax rate 41% on annual earnings from £30,931 to £150,000
Scottish top tax rate 46% on annual earnings above £150,000

Wales

PAYE tax rates and thresholds 2020 to 2021
Employee personal allowance £240 per week
£1,042 per month
£12,500 per year
Welsh basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £37,500
Welsh higher tax rate 40% on annual earnings from £37,501 to £150,000
Welsh additional tax rate 45% on annual earnings above £150,000

Emergency tax codes

The emergency tax codes from 6 April 2020 are:

  • 1250L W1
  • 1250L M1
  • 1250L X

Find out more about emergency tax codes.

Class 1 National Insurance thresholds

You can only make National Insurance deductions on earnings above the lower earnings limit.

Class 1 National Insurance thresholds 2020 to 2021
Lower earnings limit £120 per week
£520 per month
£6,240 per year
Primary threshold £183 per week
£792 per month
£9,500 per year
Secondary threshold £169 per week
£732 per month
£8,788 per year
Upper secondary threshold (under 21) £962 per week
£4,167 per month
£50,000 per year
Apprentice upper secondary threshold (apprentice under 25) £962 per week
£4,167 per month
£50,000 per year
Upper earnings limit £962 per week
£4,167 per month
£50,000 per year

Class 1 National Insurance rates

Employee (primary) contribution rates

Deduct primary contributions (employee’s National Insurance) from your employees’ pay through PAYE.

National Insurance category letter Earnings at or above lower earnings limit up to and including primary threshold Earnings above the primary threshold up to and including upper earnings limit Balance of earnings above upper earnings limit
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

You pay secondary contributions (employer’s National Insurance) to HMRC as part of your PAYE bill.

Pay employers’ PAYE tax and National Insurance.

National Insurance category letter Earnings at or above lower earnings limit up to and including secondary threshold Earnings above secondary threshold up to and including upper earnings limit, upper secondary threshold, apprentice upper secondary threshold Balance of earnings above upper earnings limit, upper secondary threshold, apprentice upper secondary threshold
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%

Class 1A National Insurance: expenses and benefits

You must pay Class 1A National Insurance on work benefits you give to your employees, example a company mobile phone. You report and pay Class 1A on expenses and benefits at the end of each tax year.

Class 1A National Insurance: termination awards and sporting testimonial payments

Class 1A National Insurance contributions are due on the amount of termination awards paid to employees which exceed £30,000 and on the amount of sporting testimonial payments paid by independent committees which exceed £100,000. You report and pay Class 1A on these types of payments during the tax year as part of your payroll

National Insurance class 2020 to 2021 rate
Class 1A 13.8%

Pay employers’ Class 1A National Insurance.

Class 1B National Insurance: PAYE Settlement Agreements (PSAs)

You pay Class 1B National Insurance if you have a PSA. This allows you to make one annual payment to cover all the tax and National Insurance due on small or irregular taxable expenses or benefits for your employees.

National Insurance class 2020 to 2021 rate
Class 1B 13.8%

Pay Class 1B National Insurance.

National Minimum Wage

The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law. Use the National Minimum Wage calculator to check if you’re paying a worker the National Minimum Wage or if you owe them payments from past years.

These rates apply from 1 April 2020.

Category of worker Hourly rate
Aged 25 and above (national living wage rate) £8.72
Aged 21 to 24 inclusive £8.20
Aged 18 to 20 inclusive £6.45
Aged under 18 (but above compulsory school leaving age) £4.55
Apprentices aged under 19 £4.15
Apprentices aged 19 and over, but in the first year of their apprenticeship £4.15

National Minimum Wage rates for previous years.

Statutory Maternity, Paternity, Adoption, Shared Parental and Parental Bereavement Pay

Use the maternity, adoption and paternity calculator for employers to calculate your employee’s Statutory Maternity Pay (SMP), paternity or adoption pay, their qualifying week, average weekly earnings and leave period.

These rates apply from 5 April 2020.

Type of payment or recovery 2020 to 2021 rate
SMP – weekly rate for first 6 weeks 90% of the employee’s average weekly earnings
SMP – weekly rate for remaining weeks £151.20 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Paternity Pay (SPP) – weekly rate £151.20 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Adoption Pay (SAP) – weekly rate for first 6 weeks 90% of employee’s average weekly earnings
SAP – weekly rate for remaining weeks £151.20 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Shared Parental Pay (ShPP) – weekly rate £151.20 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Parental Bereavement Pay (SPBP) – weekly rate (applies from 6 April 2020) £151.20 or 90% of the employee’s average weekly earnings, whichever is lower
SMP, SPP, ShPP, SAP or SPBP – proportion of your payments you can recover from HMRC 92% if your total Class 1 National Insurance (both employee and employer contributions) is above £45,000 for the previous tax year

103% if your total Class 1 National Insurance for the previous tax year is £45,000 or lower

Statutory Sick Pay (SSP)

The same weekly SSP rate applies to all employees. However, the amount you must actually pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.

Use the SSP calculator to work out your employee’s sick pay, or use these rates.

Unrounded daily rates Number of qualifying 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
13.6928 7 13.70 27.39 41.08 54.78 68.47 82.16 95.85
15.9750 6 15.98 31.95 47.93 63.90 79.88 95.85  
19.1700 5 19.17 38.34 57.51 76.68 95.85    
23.9625 4 23.97 47.93 71.89 95.85      
31.9500 3 31.95 63.90 95.85        
47.9250 2 47.93 95.85          
95.85 1 95.85            

Student loan and postgraduate loan recovery

If your employees’ earnings are above the earnings threshold, record their student loan and postgraduate loan deductions in your payroll software. It will automatically calculate and deduct repayments from their pay.

Rate or threshold 2020 to 2021 rate
Employee earnings threshold for student loan plan 1 £19,390 per year
£1,615.83 per month
£372.88 per week
Employee earnings threshold for student loan plan 2 £26,575 per year
£2,214.58 per month
£511.05 per week
Student loan deductions 9%
Employee earnings threshold for postgraduate loan £21,000 per year
£1,750.00 per month
£403.84 per week
Postgraduate loan deductions 6%

Company cars: advisory fuel rates

Use advisory fuel rates to work out mileage costs if you provide company cars to your employees.

These rates apply from 1 March 2020.

Engine size Petrol – amount per mile LPG – amount per mile
1400cc or less 12 pence 8 pence
1401cc to 2000cc 14 pence 10 pence
Over 2000cc 20 pence 14 pence
Engine size Diesel – amount per mile
1600cc or less 9 pence
1601cc to 2000cc 11 pence
Over 2000cc 13 pence

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Advisory fuel rates for previous periods.

Advisory electricity rate for fully electric cars

Amount per mile – 4 pence.

Electricity is not a fuel for car fuel benefit purposes.

Employee vehicles: mileage allowance payments

Mileage allowance payments are what you pay your employees for using their own vehicle for business journeys.

You can pay your employees an approved amount of mileage allowance payments each year without having to report them to HMRC. To work out the approved amount, multiply your employee’s business travel miles for the year by the rate per mile for their vehicle.

Find out more about reporting and paying mileage allowance payments.

Type of vehicle Rate per business mile 2020 to 2021
Car For tax purposes: 45 pence for the first 10,000 business miles in a tax year, then 25 pence for each subsequent mile

For National Insurance purposes: 45 pence for all business miles
Motorcycle 24 pence for both tax and National Insurance purposes and for all business miles
Cycle 20 pence for both tax and National Insurance purposes and for all business miles
Published 25 February 2020
Last updated 27 March 2020 + show all updates
  1. Rates and thresholds for employers have been updated for the tax year 2020 to 2021.

  2. Rates and thresholds for employers have been updated for the tax year 2020 to 2021.

  3. First published.