2024/25 Salaries & Tax Code Update

In anticipation of the new tax year starting 6th April 2024, we have summarised the important information relating to salaries and tax codes for the 2024/25 year. As always, we will update our limited company payrolled clients as the tax landscape changes throughout the year to ensure maximum tax efficiency from both a company and personal tax perspective.

• The basic PAYE coding for 2024/25 (which starts on 6 April 2024) is set at 1257L, the same as it was in the previous tax year. This gives employees a personal allowance of £12,570, which they can earn in the year without having to pay any income tax.
• A “K” code is a negative code. This will arise where company benefits exceed the tax-free personal allowance of £12,570. Effectively, this code will increase the taxable pay for the taxpayer.
• For every £2 of income over £100,000, the taxpayer will lose £1 of personal allowance. This is an effective tax rate of 60%. Once the taxpayer exceeds £125,140, they will lose their full £12,570 tax-free personal allowance.
• The national minimum wages are set to change to the below from 1 April 2024:

• As shown, from 1 April 2024 workers aged 21 and over will be entitled to the National Living Wage (in the previous year this was only for those aged 23 and over).
• Apprentices are entitled to the apprentice rate if they are either aged under 19 or aged 19 or over and in the first year of their apprenticeship
• However, apprentices are entitled to the minimum wage for their age if they are aged 19 or over and have completed the first year of their apprenticeship.