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Tax Legislation

PAYE tax and Class 1 National Insurance contributions

Unless otherwise stated, the following figures apply from 6 April 2026 to 5 April 2027.

PAYE tax and Class 1 National Insurance contributions

Charging location Electric — amount per mile Home charger 7 pence Public charger 15 pence
Your payroll software will work out how much tax and National Insurance to deduct from your employees’ pay. If you decide to run payroll yourself, you need to find payroll software to do this.
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

The standard employee personal allowance for the 2026 to 2027 tax year is:
  • £242 per week
  • £1,048 per month
  • £12,570 per year
PAYE tax rate Rate of tax Annual earnings the rate applies to (above the PAYE threshold)
Basic tax rate 20% Up to £37,700
Higher tax rate 40% From £37,701 to £125,140
Additional tax rate 45% Above £125,140

Scotland

The standard employee personal allowance for the 2026 to 2027 tax year is:
  • £242 per week
  • £1,048 per month
  • £12,570 per year
PAYE tax rate Rate of tax Annual earnings the rate applies to (above the PAYE threshold)
Starter tax rate 19% Up to £3,967
Basic tax rate 20% From £3,968 to £16,956
Intermediate tax rate 21% From £16,957 to £31,092
Higher tax rate 42% From £31,093 to £62,430
Advanced tax rate 45% From £62,431 to £125,140
Top tax rate 48% Above £125,140

Wales

The standard employee personal allowance for the 2026 to 2027 tax year is:
  • £242 per week
  • £1,048 per month
  • £12,570 per year
PAYE tax rate Rate of tax Annual earnings the rate applies to (above the PAYE threshold)
Basic tax rate 20% Up to £37,700
Higher tax rate 40% From £37,701 to £125,140
Additional tax rate 45% Above £125,140

Emergency tax codes

The emergency tax codes from 6 April 2023 are:
  • 1257L W1
  • 1257L M1
  • 1257L X
You can only make National Insurance deductions on earnings above the lower earnings limit.
Class 1 National Insurance thresholds (2026 to 2027) Rate
Lower earnings limit £129 per week
£559 per month
£6,708 per year
Primary threshold £242 per week
£1,048 per month
£12,570 per year
Secondary threshold £96 per week
£417 per month
£5,000 per year
Freeport upper secondary threshold £481 per week
£2,083 per month
£25,000 per year
Investment Zone upper secondary threshold £481 per week
£2,083 per month
£25,000 per year
Upper secondary threshold (under 21) £967 per week
£4,189 per month
£50,270 per year
Apprentice upper secondary threshold (apprentice under 25) £967 per week
£4,189 per month
£50,270 per year
Veterans upper secondary threshold £967 per week
£4,189 per month
£50,270 per year
Upper earnings limit £967 per week
£4,189 per month
£50,270 per year

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 primary threshold up to and including upper earnings limit Balance of earnings above upper earnings limit
A 0% 8% 2%
B 0% 1.85% 2%
C nil nil nil
D (Investment Zone — deferment) 0% 2% 2%
E (Investment Zone — married women and widows reduced rate) 0% 1.85% 2%
F (Freeport) 0% 8% 2%
H (apprentice under 25) 0% 8% 2%
I (Freeport — married women and widows reduced rate) 0% 1.85% 2%
J 0% 2% 2%
K (Investment Zone — state pensioner) nil nil nil
L (Freeport — deferment) 0% 2% 2%
M (under 21) 0% 8% 2%
N (Investment Zone) 0% 8% 2%
S (Freeport — state pensioner) nil nil nil
V (veteran) 0% 8% 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.
National Insurance category letter Earnings above secondary threshold up to and including lower earnings limit Earnings above lower earnings limit up to and including Freeport and Investment Zone upper secondary thresholds Earnings above Freeport and Investment Zone upper secondary thresholds up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans
A 15% 15% 15% 15%
B 15% 15% 15% 15%
C 15% 15% 15% 15%
D (Investment Zone — deferment) 0% 0% 15% 15%
E (Investment Zone — married women and widows reduced rate) 0% 0% 15% 15%
F (Freeport) 0% 0% 15% 15%
H (apprentice under 25) 0% 0% 0% 15%
I (Freeport — married women and widows reduced rate) 0% 0% 15% 15%
J 15% 15% 15% 15%
K (Investment Zone — state pensioner) 0% 0% 15% 15%
L (Freeport — deferment) 0% 0% 15% 15%
M (under 21) 0% 0% 0% 15%
N (Investment Zone) 0% 0% 15% 15%
S (Freeport — state pensioner) 0% 0% 15% 15%
V (veteran) 0% 0% 0% 15%
Z (under 21 — deferment) 0% 0% 0% 15%

Director’s contribution rates

The rates also apply to directors. You can read more information about:

The methods used for working out National Insurance contributions for company directors.

The rules for paying National Insurance contributions for company directors.
You must pay Class 1A National Insurance on work benefits you give to your employees, for example a company mobile phone. You report and pay Class 1A on expenses and benefits at the end of each tax year.
The National Insurance Class 1A rate on expenses and benefits for 2026 to 2027 is 15%.
Class 1A National Insurance contributions are due on the amount of termination awards paid to employees which are over £30,000 and on the amount of sporting testimonial payments paid by independent committees which are over £100,000. You report and pay Class 1A on these types of payments during the tax year as part of your payroll.
The National Insurance Class 1A rate on termination awards and sporting testimonial payments for 2026 to 2027 is 15%.
You pay Class 1B National Insurance if you have a PAYE Settlement Agreement. 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.
The National Insurance Class 1B rate for 2026 to 2027 is 15%.
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 2026.
Category of worker Hourly rate
Aged 21 and above (national living wage rate) £12.71
Aged 18 to 20 inclusive £10.85
Aged under 18 (but above compulsory school leaving age) £8
Apprentices aged under 19 £8
Apprentices aged 19 and over, but in the first year of their apprenticeship £8
Use the maternity, adoption and paternity calculator for employers to work out your employee’s:
  • qualifying week
  • average weekly earnings
  • leave period
Type of payment 2026 to 2027 rate
Statutory Maternity Pay (SMP) — weekly rate for first 6 weeks 90% of the employee’s average weekly earnings
SMP — weekly rate for remaining weeks £194.32 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Paternity Pay (SPP) — weekly rate £194.32 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Adoption Pay (SAP) — weekly rate for first 6 weeks 90% of the employee’s average weekly earnings
SAP — weekly rate for remaining weeks £194.32 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Shared Parental Pay (ShPP) — weekly rate £194.32 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Parental Bereavement Pay (SPBP) — weekly rate £194.32 or 90% of the employee’s average weekly earnings, whichever is lower
Statutory Neonatal Care Pay (SNCP) — weekly rate £194.32 or 90% of the employee’s average weekly earnings, whichever is lower
You can recover a proportion of your payments from HMRC for SMP, SPP, ShPP, SAP, SPBP or SNCP.
The 2026 to 2027 recovery rate is:
  • 92% if your total Class 1 National Insurance (both employee and employer contributions) is above £45,000 for the previous tax year
  • 109% if your total Class 1 National Insurance for the previous tax year is £45,000 or lower

You cannot recover Statutory Sick Pay (SSP).

The weekly rate of Statutory Sick Pay (SSP) for 2026 to 2027 is £123.25 or 80% of the employee’s average weekly earnings, whichever is lower.
The amount of SSP you must pay an employee for each day they’re off work from the first day of illness (the daily rate) depends on the:
  • employee’s average weekly earnings
  • number of ‘qualifying days’ they work each week
A daily rate will apply either based on the standard weekly rate or will be specific to the employee. The SSP daily rates and amounts to pay in the tables are based on the standard weekly rate.
Unrounded daily rates Number of qualifying days in week
£17.6071 7
£20.5416 6
£24.65 5
£30.8125 4
£41.0833 3
£61.625 2
£123.25 1

7 qualifying days in a week

Use these rates to work out how much Statutory Sick Pay you need to pay an employee who works 7 qualifying days in a week.
Number of days to pay Amount to pay
1 £17.61
2 £35.22
3 £52.83
4 £70.43
5 £88.04
6 £105.65
7 £123.25

6 qualifying days in a week

Use these rates to work out how much Statutory Sick Pay you need to pay an employee who works 6 qualifying days in a week.

Number of days to pay Amount to pay
1 £20.55
2 £41.09
3 £61.63
4 £82.17
5 £102.71
6 £123.25

5 qualifying days in a week

Use these rates to work out how much Statutory Sick Pay you need to pay an employee who works 5 qualifying days in a week.
Number of days to pay Amount to pay
1 £24.65
2 £49.30
3 £73.95
4 £98.60
5 £123.25

4 qualifying days in a week

Use these rates to work out how much Statutory Sick Pay you need to pay an employee who works 4 qualifying days in a week.
Number of days to pay Amount to pay
1 £30.82
2 £61.63
3 £92.44
4 £123.25

3 qualifying days in a week

Use these rates to work out how much Statutory Sick Pay you need to pay an employee who works 3 qualifying days in a week.
Number of days to pay Amount to pay
1 £41.09
2 £82.17
3 £123.25

2 qualifying days in a week

Use these rates to work out how much Statutory Sick Pay you need to pay an employee who works 2 qualifying days in a week.
Number of days to pay Amount to pay
1 £61.63
2 £123.25

1 qualifying day in a week

Use these rates to work out how much Statutory Sick Pay you need to pay an employee who works 1 qualifying day in a week.

Number of days to pay Amount to pay
1 £123.25
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 2026 to 2027 rate
Employee earnings threshold for student loan plan 1 £26,900 per year
£2,241.66 per month
£517.30 per week
Employee earnings threshold for student loan plan 2 £29,385 per year
£2,448.75 per month
£565.09 per week
Employee earnings threshold for student loan plan 4 £33,795 per year
£2,816.25 per month
£649.90 per week
Employee earnings threshold for student loan plan 5 £25,000 per year
£2,083.33 per month
£480.76 per week
Student loan deductions 9%
Employee earnings threshold for postgraduate loan £21,000 per year
£1,750 per month
£403.84 per week
Postgraduate loan deductions 6%
Use advisory fuel rates to work out mileage costs if you provide company cars to your employees.
These rates apply from 1 June 2026.
Engine size Petrol — amount per mile Liquefied Petroleum Gas (LPG) — amount per mile
1400cc or less 14 pence 11 pence
1401cc to 2000cc 17 pence 13 pence
Over 2000cc 26 pence 21 pence
Engine size Diesel — amount per mile
1600cc or less 15 pence
1601cc to 2000cc 17 pence
Over 2000cc 23 pence
Hybrid cars are treated as either petrol or diesel cars for this purpose.

Advisory electricity rate for fully electric cars from 1 June 2026

Charging location Electric — amount per mile
Home charger 7 pence
Public charger 15 pence

Electricity is not a fuel for car fuel benefit purposes.

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.
Type of vehicle Rate per business mile 2026 to 2027
Car For tax purposes — 55 pence for the first 10,000 business miles in a tax year, then 25 pence for each subsequent mile

For National Insurance purposes — 55 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
Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount.
Employment Allowance for 2026 to 2027 is £10,500.
Employers and connected companies with a total annual pay bill of more than £3 million, are liable to the Apprenticeship Levy, which is payable monthly. Employers who are not connected to another company or charity will have an annual allowance that reduces the amount of Apprenticeship Levy you have to pay. Apprenticeship Levy is charged at a percentage of your annual pay bill.
Allowance or charge 2026 to 2027 rate
Apprenticeship Levy allowance £15,000
Apprenticeship Levy charge 0.5%