Important Updates for Payroll: December 2017

Thursday 21 December 2017

By Halinka Rands, Payroll Team Leader, Equiom Scotland

The following gives an update on new income thresholds, tax bands and other information as a result of the recent UK budget announcement. Equiom Scotland is on hand to answer any questions or concerns you may have about these changes and how they affect your payroll administration.

Income tax bands of taxable income (n/a to Scotland)

                                                            Tax Year 17-18                                 Tax Year 18-19

Basic rate                                               £1 - £33,500                                     £1 - £34,500                                                        

Higher rate                                        £33,501 - £150,000                         £34,501 - £150,000                                                   

Additional rate                                    Over £150,000                                  Over £150,000                                                   

Income tax allowances (n/a to Scotland)

                                                            Tax Year 17-18                                 Tax Year 18-19

Personal Allowance                                   £11,500                                              £11,850

Income limit for personal allowance      £100,000                                            £100,000

Income limit for married couples            £28,000                                             £28,900


Marriage allowance                                    £1,150                                                 £1,185

Dividend allowance                                    £5,000                                                 £2,000

Max married couple allowance                £8,445                                                  £8,695

Min married couple allowance                 £3,260                                                  £3,360

Class 1 National Insurance contributions - employee and employer rates and thresholds and allowances

                                                             Tax Year 17-18                                   Tax Year 18-19 

Weekly Lower Earnings Limit                       £113                                                   £116

Weekly primary threshold                             £157                                                   £162


Upper earnings limit                                      £866                                                   £892

Upper secondary threshold - u21's             £3,000                                                £3,000

The Employer’s secondary Class 1 contribution rate above the Upper Secondary Threshold across all categories remains at 13.8%.

Apprenticeship Levy

The Apprenticeship Levy allowance per employer remains at £15,000 meaning that the Apprenticeship Levy rate remains unchanged at 0.5%

Termination Payments

Termination Payments – from 6 April 2018, all Payment In Lieu of Notice (PILON) arrangements will be treated as taxable earnings. Employees will pay tax and Class 1 National Insurance contributions on the amount paid, even if this was not part of a contractual PILON.

National Living Wage / National Minimum Wage - April 2018

The government has approved the following rate recommendations made by the Low Pay Commission (as at the time of publishing these are still subject to Parliamentary approval):

Workers aged 25+                 Increase to £7.83 per hour (was £7.50)

21-24 year olds                      Increase to £7.38 per hour (was £7.05)

18-20 year olds                      Increase to £5.90 per hour (was £5.60)

16-17 year olds                      Increase to £4.20 per hour (was £4.05)

Apprentices*                          Increase to £3.70 per hour (was £3.50)

Accommodation offset        Increase to £7.00 (was £6.40)


* under 19 or in first year of apprenticeship

Further details

You can find out more about the UK Autumn Budget by visiting the budget summary


If you require any support with the above topics please contact Equiom Scotland's Payroll team