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