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Changes to PAYE and NIC Rates and Allowances from 6th April 2011

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Who will be affected by the changes? Income tax payers, employees and the self employed.

 

PAYE

Bandwidth From To Rate (%) Basic Rate Band
0
0.01
7475.00
00.00
No
35,000
7475.01
42475.00
20.00
Yes
150,000
42,475.01
150,000.00
40.00
No
Excess
150,000
Excess
50.00
No

The effect of the extra £1,000 added on to the personal allowance is a £200 saving per year (20% of £1,000).

National Insurance

National Insurance contributions - rates and allowances

£ per week 2010-11 2011-12
Lower earnings limit, primary Class 1
£97
£102
Upper earnings limit, primary Class 1
£844
£817
Upper accrual point
£770
£770
Primary Threshold
£110
£139
Secondary Threshold
£110
£136

Employees' primary Class 1 rate between primary
threshold and upper earnings limit

11%
12%
Employees' primary Class 1 rate above upper earnings limit
1%
2%

 

COMMENT

In summary, the lower paid will be better off and up to an income of £24,000 you'll pay less tax and less NIC. At that point the increase in NI rate will kick in and start to negate the PAYE saving. At £43,000 PA you will be getting less net pay. At £44,000 you'll be paying more PAYE than this year.

For employers, the cost of employing someone will increase when you pay them over £27,000 PA.

Click here for a table showing the effect on net pay and the total cost to employers on an annual basis.

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