Rates and Thresholds in 2023/24
The tax year runs from 6th April 2023 to 5th April 2024 and as always there have been some tweaks to the bands and thresholds.
What impact will it have on you?
National Insurance (NI)
Description | Threshold |
Lower Earnings Limit (LEL)Salary above this qualifies towards State Pension | £6,393 |
Primary ThresholdThe point at which employees start paying NI on any earnings above the threshold | £12,570 |
Secondary ThresholdThe point at which employers start paying NI at a rate of 13.8% | £9,100 |
Upper Earnings Limit (UEL)Earnings above the Primary Threshold up to (and including) the Upper Earnings Limit incur NI at a rate of 12% | £50,270 |
Earnings above the Upper Earnings LimitSalary above this incurs NI at a rate of 2% | £50,271 |
Employment AllowanceEmployers can claim up to this amount to cover their employer’s NI. To be eligible there must be at least 1 employee or 2 directors on the payroll. | £5,000 |
Income Tax
The table below shows the income tax rates and band thresholds for 2023/24 in England, Wales, and Northern Ireland.
Be aware that Scotland uses different tax bands and thresholds!
Tax Band | Tax Rate | 2023/24 |
| Personal Allowance
| 0% | £12,570 |
| Basic Rate
| 20% | £12,571 – £50,270 |
| Higher Rate
| 40% | £50,271-£125,140 |
| Additional Rate
| 45% | £125,141 upwards |
Corporation Tax
From April 2023 Corporation Tax rates are changing.
- There will be a small companies tax rate of 19% for profits under £50,000.
- Profits above £250,000 will be taxed at 25%
- In between there will then be an effective rate of tax of 26.5% (profits between £50,001 and £250,000)
Why is the effective rate of 26.5% higher than the main rate of 25%?
This is to ensure that when profits exceed £250,000 that 25% is charged on the full amount, for example:
- Profits of £250,000 taxed at 25% = £62,500
- First £50,000 taxed at 19% = £9,500
- Next £200,000 taxed at 26.5% =£53,000
- £9,500 + £53,000 = £62,500
Estimating your Corporation Tax liability within the year will be more complex from April 2023 and therefore we urge you to save as much as you can towards this liability.
The final Corporation Tax bill will be confirmed when your annual accounts and tax returns are prepared at the end of your Company’s financial year.
Dividend Tax
The amount of tax you pay on dividends depends on your total income, and how much of that income is specifically from dividend payments.
The good news is that you don’t pay NI on dividends!
You can use allowances to reduce the amount of tax paid on your dividends. The first is any unused personal allowance (in 2023/24 this is £12,570) and then there is the dividend allowance. Up until recently this was £2,000, however in 2023/24 this drops to £1,000 (and then in 2024/25 it drops again to an allowance of just £500!)
The table below shows the tax rates for dividends for each tax bracket:
Tax Band | Tax Rate | Total Income |
| Dividend Allowance | 0% | £1,000 |
| Basic Rate | 8.75% | £12,571 – £50,270 |
| Higher Rate | 33.75% | £50,271-£125,140 |
| Additional Rate | 39.35% | £125,141 upwards |
Remember that dividends can only be paid out to shareholders where there are company profits.
It’s important not to withdraw more money than is available as you could be hit with an additional Corporation Tax charge (S445 @ 33.75%).