Tax Rates for 2011-12

Friday, 8 of April 2011

Approved mileage allowance payments
The following rates are used to calculate the maximum amount that can be exempted from tax and NICs for business miles travelled in the employee’s own vehicle.

Motor cars and vans
First 10,000 business miles* 45p per mile
Over 10,000 business miles 25p per mile
Motorcycles 24p per mile
Cycles 20p per mile

* For NICs purposes, the higher rate applies to all miles, not
only the first 10,000.

Additional passenger payments
You can also pay up to 5p per mile free of tax and NICs for each employee who travels as a passenger and is also on a business journey.

Class 1A NICs on benefits in kind
If you provide benefits, including cars, to an employee during the tax year, you may have to pay Class 1A NICs.The Class 1A NICs rate for benefits provided in 2010–11 is 12.8%.

Class 1A NICs for benefits provided in the 2010–11 tax year are due to be paid by 19 July 2011. If you pay by an approved electronic payment method please pay any Class 1A NICs in time for your cleared payment to reach us no later than 22 July 2011.

Class 1B NICs
If you make expenses payments to your employees or give them benefits, and you include these in a PAYE Settlement Agreement, you may have to pay Class 1B NICs. The Class 1B NICs rate for the 2010–11 tax year is 12.8%.

Class 1B NICs in respect of the 2010–11 tax year are due to be paid by 19 October 2011. If you pay by an approved electronic payment method please pay any Class 1B NICs in time for your cleared payment to reach us no later than 22 October 2011.

Class 1 NICs
Earnings limits
To calculate NICs, five levels of earnings are used:
• Lower Earnings Limit (LEL)
• Secondary Threshold (ST)
• Primary Threshold (PT)
• Upper Accrual Point (UAP)
• Upper Earnings Limit (UEL

Lower Earnings Limit (LEL)
This is the minimum level of earnings that an employee needs to qualify for benefits, such as State Pension and Jobseeker’s Allowance. If an employee’s earnings reach or exceed this level, but don’t exceed the Primary Threshold, they won’t pay NICs but will be treated as
having paid them when claiming benefit.

Secondary Threshold (ST)
When earnings exceed this level NICs become payable by the employer.

Primary Threshold (PT)
When earnings exceed this level NICs become payable by the employee

Upper Accrual Point (UAP)
The UAP is set at £770 a week, £3,337 a month, and £40,040 a year. Employers and their employees who are members of contracted-out occupational pension schemes pay NICs at the reduced contracted-out rate up to the UAP only. They then pay NICs at the higher standard rate on the employee’s earnings between the UAP and the UEL.

Upper Earnings Limit (UEL)
Where earnings exceed the UEL, the employee pays NICs at 2% on those earnings above the UEL. The UEL doesn’t apply to employer’s NICs, which are payable on all earnings above the ST, including those above the UEL, at the appropriate rate.

Thresholds
The PAYE thresholds (the level of earnings at which tax becomes payable) are: £144.00 weekly, £623.00 monthly.

Rates
The tax rates are: Basic rate 20% from £1 to £35,000
Higher rate 40% from £35,001 to £150,000
Additional rate 50% from £150,001 and above.

K codes
Tax codes starting with a K have a regulatory limit of 50% of an employee’s gross pay in the pay period.

This limit restricts the amount of tax that is deducted from the employee’s pay to ensure that they retain a
certain amount of take home pay.

Emergency tax code
The emergency tax code is 747L.

Statutory Sick Pay (SSP)
The weekly rate of SSP is £81.60 for employees with average weekly earnings of £102.00 or more.

Recovery of SSP
In certain circumstances you may be able to recover some of the SSP you pay under the Percentage Threshold Scheme. You can get back any SSP that you have paid over and above 13% of your NICs liability for the same tax month in which you have paid SSP.

Statutory Maternity Pay (SMP)
Women expecting a baby on or before 2 April 2011 who satisfy the qualifying conditions are entitled to a maximum of 39 weeks SMP. These include having average weekly earnings of:
• £95 if their baby is due between 19 July 2009 and 17 July 2010
• £97 if their baby is due between 18 July 2010 and 16 July 2011.

First six weeks of payment 90% of employee’s average weekly earnings.
Remaining weeks up to 2 April 2011 Pay the lesser of:
— 90% of average weekly earnings, or £124.88

Women expecting a baby on or after 3 April 2011 who satisfy the qualifying conditions are entitled to
a maximum of 39 weeks SMP. These include having average weekly earnings of:
• £97 if their baby is due between 18 July 2010 and 16 July 2011
• £102.00 if their baby is due between 17 July 2011 and 14 July 2012.

First six weeks of payment 90% of employee’s average weekly earnings.
Remaining weeks from 3 April 2011 Pay the lesser of:
— 90% of average weekly earnings, or £128.73

Ordinary Statutory Paternity Pay (OSPP)
OSPP is paid for a maximum of two weeks to employees who satisfy the qualifying conditions.

Birth
If the new average weekly earnings amount is at least:
• £97.00 for babies due between 18 July 2010 and
16 July 2011, or
• £102.00 for babies due between 17 July 2011 and
14 July 2012
your employee’s earnings are high enough to get OSPP.

Adoption
If the new average weekly earnings amount is at least:
• £97.00 and the adoption agency told the adopter that they had been matched with a child between 4 April 2010 and 2 April 2011, or
• £102.00 and the adoption agency told the adopter that they had been matched with a child between 3 April 2011 and 31 March 2012
your employee’s earnings are high enough to get OSPP.

The weekly rate up to 2 April 2011 is the lesser of £124.88 or 90% of the employee’s average weekly earnings.
The weekly rate up from 3 April 2011 is the lesser of £128.73 or 90% of the employee’s average weekly earnings.

Additional Statutory Paternity Pay (ASPP)
ASPP is paid for a maximum of 19 weeks (or more in the event of the death of the mother or adopter) to employees who satisfy the qualifying conditions. These include having average weekly earnings of £102.00 if their baby is due on or after 3 April 2011, or if they are
notified that they have been matched with a child, or for overseas adoptions, the child entered the UK from abroad on or after 3 April 2011.

Birth
If the new average weekly earnings is at least:
• £97.00 for babies due between 18 July 2010 and 16 July 2011, or
• £102.00 for babies due between 17 July 2011 and 14 July 2012
your employee’s earnings are high enough to get ASPP.

Adoption
If the new average weekly earnings amount is at least £102.00 and the adoption agency told the adopter that they had been matched with a child between 3 April 2011 and 31 March 2012 your employee’s
earnings are high enough to get ASPP.

The weekly rate from 3 April 2011 is the lesser of £128.73 or 90% of the employee’s average weekly earnings.

Statutory Adoption Pay (SAP)
Employees who are adopting a child and are notified that they have been matched with a child or received official notification that they are eligible to adopt a child from abroad on or after 3 April 2011, and who satisfy the qualifying conditions, are entitled to a maximum of 39 weeks SAP. These include having average weekly earnings of:

• at least £97.00 gross a week and the adoption agency told the adopter that they had been matched with a child between 4 April 2010 and 2 April 2011, or
• at least £102.00 gross a week and the adoption agency told the adopter that they had been matched with a child between 3 April 2011 and 31 March 2012.

The weekly rate up to 2 April 2011 is the lesser of £124.88 or 90% of the employee’s average weekly earnings.

The weekly rate from 3 April 2011 is the lesser of £128.73 or 90% of the employee’s average weekly earnings.

All employers are entitled to recover 92% of the SMP/OSPP/ASPP/SAP they pay.
If you qualify for Small Employer’s Relief you are entitled to recover 100% of the SMP/OSPP/ASPP/SAP that you pay plus 3% for payments made on or after 6 April 2011.

The Small Employer’s Relief Threshold is £45,000 for payments made on or after 6 April 2011.

National Minimum Wage
From pay reference periods starting on or after 1 October 2010 there are four different National Minimum Wage (NMW) rates. NMW rates are usually updated in October each year. The rates that apply from 1 October 2010 are as follows:
• Main Rate for workers aged 21 years and over - £5.93 per hour.
• For workers aged 18 to 20 inclusive - £4.92 per hour.
• For workers aged under 18 (but above compulsory school leaving age) - £3.64 per hour.
• Rate for apprentices who are aged under 19 years or over 19 years and in the first year of their
apprenticeship - £2.50 per hour.
These rates are likely to change from 1 October 2011.

Collection of student loans
The annual threshold, above which student loan repayments become due, is £15,000

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