Guidance

Rates and thresholds for employers 2017 to 2018

From:: HM Revenue & Customs
Part of:: Rates and allowances: HM Revenue and Customs, Tax agent and adviser guidance, and PAYE
Published:: 9 February 2017
Last updated:: 30 May 2017 see all updates

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 2017 and 5 April 2018.

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 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	2017 to 2018
Employee personal allowance	£221 per week £958 per month £11,500 per year
UK Basic tax rate	20% on annual earnings above the PAYE tax threshold and up to £33,500
UK Higher tax rate	40% on annual earnings from £33,501 to £150,000
UK Additional tax rate	45% on annual earnings above £150,000
Scottish Basic tax rate	20% on annual earnings above the PAYE tax threshold and up to £31,500
Scottish Higher tax rate	40% on annual earnings from £31,501 to £150,000
Scottish Additional tax rate	45% on annual earnings above £150,000
Emergency tax codes	1150L W1, 1150L M1 or 1150L X

Class 1 National Insurance thresholds

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

Class 1 National Insurance thresholds	2017 to 2018
Lower Earnings Limit (LEL)	£113 per week £490 per month £5,876 per year
Primary Threshold (PT)	£157 per week £680 per month £8,164 per year
Secondary Threshold (ST)	£157 per week £680 per month £8,164 per year
Upper Secondary Threshold (under 21) (UST)	£866 per week £3,750 per month £45,000 per year
Apprentice Upper Secondary Threshold (apprentice under 25) (AUST)	£866 per week £3,750 per month £45,000 per year
Upper Earnings Limit (UEL)	£866 per week £3,750 per month £45,000 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 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

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 LEL up to and including ST	Earnings above ST 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%

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 at the end of each tax year.

NI class	2017 to 2018 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	2017 to 2018 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 April 2017.

Category of worker	Hourly rate
Aged 25 and above (national living wage rate)	£7.50
Aged 21 to 24 inclusive	£7.05
Aged 18 to 20 inclusive	£5.60
Aged under 18 (but above compulsory school leaving age)	£4.05
Apprentices aged under 19	£3.50
Apprentices aged 19 and over, but in the first year of their apprenticeship	£3.50

See National Minimum Wage rates for previous years.

Statutory maternity, paternity, adoption and shared parental pay

Use the maternity 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.

Type of payment or recovery	2017 to 2018 rate
SMP - weekly rate for first six weeks	90% of the employee’s average weekly earnings
SMP - weekly rate for remaining weeks	£140.98 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory paternity pay (SPP) - weekly rate	£140.98 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory adoption pay (SAP) - weekly rate for first six weeks	90% of employee’s average weekly earnings
SAP - weekly rate for remaining weeks	£140.98 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory shared parental pay (ShPP) - weekly rate	£140.98 or 90% of the employee’s average weekly earnings, whichever is lower
SMP/SPP/ShPP/SAP - 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’ (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
£12.7642	7	£12.77	£25.53	£38.30	£51.06	£63.83	£76.59	£89.35
£14.8916	6	£14.90	£29.79	£44.68	£59.57	£74.46	£89.35
£17.8700	5	£17.87	£35.74	£53.61	£71.48	£89.35
£22.3375	4	£22.34	£44.68	£67.02	£89.35
£29.7833	3	£29.79	£59.57	£89.35
£44.6750	2	£44.68	£89.35
£89.3500	1	£89.35

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	2017 to 2018 rate
Employee earnings threshold for Plan 1	£17,775 per year £1,481 per month £341 per week
Employee earnings threshold for Plan 2	£21,000 per year £1,750 per month £403 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 June 2017.

Engine size	Petrol - amount per mile	LPG - amount per mile
1400cc or less	11 pence	7 pence
1401cc to 2000cc	14 pence	9 pence
Over 2000cc	21 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.

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 2017 to 2018
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

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