Business tax – guidance

Rates and thresholds for employers 2014 to 2015

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

Unless otherwise stated, the figures quoted apply between 6 April 2014 and 5 April 2015.

PAYE tax and Class 1 National Insurance contributions

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

Your payroll software will calculate how much tax and National Insurance (NI) 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.

PAYE tax rates, thresholds and codes 2014 to 2015
Employee personal allowance £192 per week
£833 per month
£10,000 per year
Basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £31,865
Higher tax rate 40% on annual earnings from £31,866 to £150,000
Additional tax rate 45% on annual earnings above £150,000
Emergency tax codes 1000L W1, 1000L M1 or 1000L X

Class 1 National Insurance thresholds

You can only make National Insurance (NI) deductions on earnings above the Lower Earnings Limit (LEL).

Class 1 NI thresholds 2014 to 2015
Lower Earnings Limit (LEL) £111 per week
£481 per month
£5,772 per year
Primary Threshold (PT) £153 per week
£663 per month
£7,956 per year
Secondary Threshold (ST) £153 per week
£663 per month
£7,956 per year
Upper Accrual Point (UAP) £770 per week
£3,337 per month
£40,040 per year
Upper Earnings Limit (UEL) £805 per week
£3,489 per month
£41,865 per year

Class 1 National Insurance rates

Employee (primary) contribution rates

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

NI category letter Earnings at or above LEL up to and including PT Earnings above the PT up to and including UAP Earnings above UAP up to and including UEL Balance of earnings above UEL
A 0% 12% 12% 2%
B 0% 5.85% 5.85% 2%
C NIL NIL NIL NIL
D 1.4% rebate 10.60% 12% 2%
E 0% 5.85% 5.85% 2%
J 0% 2% 2% 2%
L 1.4% rebate 2% 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.

NI category letter Earnings at or above LEL up to and including ST Earnings above ST up to and including UAP Earnings above UAP up to and above UEL
A 0% 13.80% 13.80%
B 0% 13.80% 13.80%
C 0% 13.80% 13.80%
D 3.4% rebate 10.40% 13.80%
E 3.4% rebate 10.40% 13.80%
J 0% 13.80% 13.80%
L 3.4% rebate 10.40% 13.80%

Class 1A National Insurance: expenses and benefits

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

NI class 2014 to 2015 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.

NI class 2014 to 2015 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.

The rates below apply from 1 October 2014 and are likely to change again on 1 October 2015.

Category of worker Hourly rate
Aged 21 and above £6.50
Aged 18 to 20 inclusive £5.13
Aged under 18 (but above compulsory school leaving age) £3.79
Apprentices aged under 19 £2.73
Apprentices aged 19 and over, but in the first year of their apprenticeship £2.73

See National Minimum Wage rates for previous years.

Statutory maternity, paternity and adoption pay

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

Type of payment or recovery 2014 to 2015 rate
Statutory maternity pay (SMP) - weekly rate for first six weeks 90% of the employee’s average weekly earnings
SMP - weekly rate for remaining weeks £138.18 or 90% of the employee’s average weekly earnings, whichever is lower
Ordinary statutory paternity pay (OSPP) and Additional Statutory Paternity Pay (ASPP) - weekly rate £138.18 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory adoption pay (SAP) - weekly rate £138.18 or 90% of the employee’s average weekly earnings, whichever is lower
SMP/OSPP/ASPP/SAP - proportion of your payments you can recover from HMRC 92% if your total Class 1 NI (both employee and employer contributions) is above £45,000 for the previous tax year

103% if your total Class 1 NI 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’ (QDs) they work each week.

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

Unrounded daily rates Number of QDs 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
£12.5071 7 £12.51 £25.02 £37.53 £50.03 £62.54 £75.05 £87.55
£14.5916 6 £14.60 £29.19 £43.78 £58.37 £72.96 £87.55  
£17.5100 5 £17.51 £35.02 £52.53 £70.04 £87.55    
£21.8875 4 £21.89 £43.78 £65.67 £87.55      
£29.1833 3 £29.19 £58.37 £87.55        
£43.7750 2 £43.78 £87.55          
£87.5500 1 £87.55            

Student loan recovery

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

Rate or threshold 2014 to 2015 rate
Employee earnings threshold £16,910 per year
£1,409.16 per month
£325.19 per week
Student loan deductions 9%

Company cars: Advisory Fuel Rates (AFRs)

Use AFRs to work out mileage costs if you provide company cars to your employees.

The rates below apply from 1 March 2015.

Engine size Petrol LPG
1400cc or smaller 11p 8p
1401cc to 2000cc 13p 10p
Bigger than 2000cc 20p 14p
Engine size Diesel
1600cc or smaller 9p
1601cc to 2000cc 11p
Bigger than 2000cc 14p

Employee vehicles: Mileage Allowance Payments (MAPs)

MAPs are what you pay your employees for using their own vehicle for business journeys.

You can pay your employees an ‘approved amount’ of MAPs 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 MAPs.

Type of vehicle Rate per business mile 2014 to 2015
Car For tax purposes: 45p for the first 10,000 business miles in a tax year, then 25p for each subsequent mile

For NI purposes: 45p for all business miles
Motorcycle 24p for both tax and NI purposes and for all business miles
Cycle 20p for both tax and NI purposes and for all business miles