The new tax year starts on 6th April 2023, which brings changes to a range of payroll legislation. This guide highlights the changes employers should be aware of.

The 2022/2023 tax year saw hybrid rates for director's national insurance calculations that differed to the standard employee and employer Class 1 NI rates. For the 2023/2024 tax year, the rates for directors now match the employee and employer Class 1 NI rates, as they did before the increase in April 2022.

The thresholds for the 2023/2024 remain the same as the previous two tax years.

Note that these rates are applicable from 1 April, rather than 6 April with most new tax year legislation.

You also may not need to apply the increased rates as early as April. The rates should be applied from the first full pay reference period that falls on or after 1 April. The pay reference period is when your employees have worked the hours you're paying them for. For example, if you pay on 30th April for hours worked between 1st and 30th April, the new rates will take effect from 1st April. If you pay on 15th April for hours worked between 15th March and 14th April, the new rates won't take effect. The new rates take effect from the next full pay reference period which covers 15th April to 14th May, paying on 15th May.

Note that the statutory parental pay rate is applicable from the first Sunday of April (2 April 2023) and is paid for the full statutory week that falls on or after this date. The statutory week relates to the day of the week that the employee starts their parental leave. For example, if an employee started maternity leave on a Monday, their first week at the higher rate will be the week beginning Monday 3rd April.

The government announced that the Health and social care levy, previously due to be implemented in April 2023, will no longer go ahead.

The Class 1A rate on benefits, expenses and termination payments, returns to the rate of 13.8%.

The Class 1B rate on benefits and expenses reported on a PSA, also returns to the rate of 13.8%.