HMRC have confirmed the tax and NI thresholds for 2020-21 and some details of statutory parental bereavement pay.

Tax rates remain exactly as they were in 2019-20 with no change to the emergency and standard tax code of 1250L.

NI rates, however, have changed and employees can now earn £9,500 per annum, £792 per month or £183 per week before deduction of NI.  Employers will pay NI contributions on employees earnings above £8,788 per annum, £732 per month or £169 per week.

Deductions are based on the earnings of the employee each week if they are paid weekly, or each month if they are paid monthly.  The employee may not reach the annual threshold for NI contributions but if they exceed the threshold in the pay period contributions must be made.

As previously there are no employee or employer NI contributions for apprentices under the age of 25 and no employer NI contributions for employees aged 21 or under.

Increase to Statutory Pay

Statutory Sick Pay (SSP) increases from £94.25 to £95.85 - SSP cannot be recovered from HMRC

SMP/SPP/SAP/ShPP increases from £148.68 to £151.20 - 92% of this statutory pay can be recovered from HMRC if your total NI contributions for the previous tax year are more than £45,000. 103% can be recovered if your contributions are less than £45,000 for the previous tax year.

Statutory Parental Bereavement Pay

This is a new statutory payment being introduced from 6 April 2020.  Bereaved parents will be allowed to take 2 weeks bereavement leave and be paid the statutory payment of £151.20 per week.  Employers will be able to recover some or all of this payment in the same way as SMP.  Further information about who is eligible and how the leave is taken will be available at a later date.

Note:  All statutory payments are the lower of 90% of the employee's average weekly earnings or the statutory payment

Visit our Tax Rates and Thresholds 2020-21 for further information.