Includes

• PAYE thresholds and rates
• Emergency tax code
• Mileage payments
• Class 1A NICs on benefits in kind
• NICs earnings limits, thresholds and rates
• Statutory Sick Pay (SSP)
• Statutory Maternity Pay (SMP)
• Statutory Paternity Pay (SPP)
• Statutory Adoption Pay (SAP)
• Funding of SMP, SPP and SAP
• National Minimum Wage
• Collection of Student Loans

The Internet
Go to www.hmrc.gov.uk/employers

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Your Employer CD-ROM
Most of the forms and guidance you will need are available to view or print from your CD-ROM. There are also forms you can complete and save on-screen.

Your CD-ROM contains the following calculators There is a Learning Zone to help you understand topics such as Statutory Payments and Student Loan deductions.

You will also find a Payroll Basics section designed to help new and less experienced employers understand what to do when employing someone for the first time.

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Employer Helpbooks
Our Employer Helpbooks will help you understand and operate PAYE, NICs and other payroll related matters.

The Helpbooks are for guidance only, they are not comprehensive and have no legal force.

There are also other leaflets and booklets that give further guidance, for example: You can view, download and print the full range of Helpbooks, booklets and other forms and guidance from our website at
www.hmrc.gov.uk/employers or your Employer CD-ROM.

Or you can order copies from the Employer Orderline Forms and guidance in Braille, large print and audio For details of employer forms and guidance in Braille, large print or audio call the Employer Orderline on 0845 764 6646 and ask to speak to the Customer Service Team.

Yr Iaith Gymraeg Ffoniwch 0845 302 1489 i dderbyn fersiynau Cymraeg o ffurflenni a chanllawiau.

By phone - Employer Helplines
(We may record calls for quality and training purposes.)



A list of Helplines and opening hours is available

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Your HM Revenue & Customs office
Your own HM Revenue & Customs office can also help you. All our office contact details are on our website at
www.hmrc.gov.uk/local/employers/index.htm

When contacting us please tell us your Employer reference. You will find it on correspondence from your HM Revenue & Customs office.

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In Person
We can offer you education and support on all aspects of your payroll explaining We also have a range of workshops which are free of charge on many payroll topics.

You can get further information about the workshops from our website at www.hmrc.gov.uk/bst, or you can call the

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Online Services
For enquiries about our online services

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PAYE and NICs rates and limits for 2007-08

This text gives details of
• Pay As You Earn (PAYE) thresholds and rates
• Mileage payments
• Class 1 National Insurance rates and earnings limits
• Class 1A National Insurance rate
• Class 1B National Insurance rate
• Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay and Statutory Adoption Pay rates
• Funding of SMP, SPP and SAP
• National Minimum Wage
• Collection of Student loans

If you use payroll software you will need to make sure that this has been updated to incorporate the new rates and limits included in this booklet. Alternatively, the Employer CD-ROM contains calculators featuring most of these rates and limits.

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Pay As You Earn (PAYE)

Thresholds
The PAYE thresholds (the level of earnings at which tax becomes payable) are
£100.00 weekly
£435.00 monthly
These are the same as the earnings thresholds for NICs.

Rates
The tax rates are


Tax codes starting with a K have a Regulatory limit of 50%. The Regulatory limit is specified as a percentage of pay and so on, and restricts the amount of tax to be deducted from the pay in the period. Where for example, pay in the period is very low and the ‘normal’ operation of the K code would give rise to a very high tax liability, possibly even exceeding the pay and so on in the period, the overriding Regulatory limit will apply.

Emergency tax code
The emergency tax code is 522L.



Step 3 Deciding which tax code to use

If you take on a new employee

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Mileage payments

The following rates are used to calculate the maximum amount that can be exempted from tax and NICs for business miles travelled in the employee’s own vehicle.


* For NIC purposes, and irrespective of the number of business miles travelled, use the rate which applies to the first 10,000 business miles only.

Additional Passenger Payments
You can also pay up to 5p per mile free of tax and NICs for each employee who travels as a passenger and is also on a business journey.

For further information on paying employees for business miles travelled using the employee’s own transport, see the CWG2(2007), Employer Further Guide to PAYE and NICs, under ‘mileage expenses for NICs’.

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Class 1A NICs on benefits in kind

If you provide benefits, including cars, to an employee during the tax year you may have to pay Class 1A NICs.

The Class 1A NICs rate for benefits provided in 2006-07 is 12.8%.

Class 1A NICs for benefits provided in the 2006-07 tax year are due to be paid by 19 July 2007. If you pay by an approved electronic payment method please pay any Class 1A NICs in time for your cleared payment to reach us no later than 22 July 2007. See * below.

For more detailed information about benefits and expenses see You can get these from the Employer Orderline on 0845 7 646 646 or view and print them off from your Employer CD-ROM.

Guidance can also be found under Expenses and benefits in kind, a guide to tax and NICs, available on your Employer CD-ROM or on our website at www.hmrc.gov.uk/employers/ebik

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Class 1B NICs

If you make expenses payments to your employees or give them benefits, and you include these in a PAYE Settlement Agreement, you may have to pay Class 1B NICs.

The Class 1B NICs rate for the 2006-07 tax year is 12.8%.

Class 1B NICs in respect of the 2006-07 tax year are due to be paid by 19 October 2007. If you pay by an approved electronic payment method please pay any Class 1B NICs in time for your cleared payment to reach us no later than 22 October 2007. See * below.

For more detailed information about PAYE Settlement Agreements and Class 1B NICs see You can get a CWG2 from the Employer Orderline on 0845 7 646 646 or view and print it off from your Employer CD-ROM.

* Where the 22nd falls on a weekend or is a bank holiday, your cleared payment must reach us on the previous bank working day.

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Class 1 National Insurance contributions (NICs)

Earnings limits

To calculate NICs three levels of earnings are used
The corresponding weekly, monthly and annual earnings limits and thresholds are in the tables on pages 4 and 5.

This information has already been used in the NI tables and the NI calculator on your Employer CD-ROM.
If you are using the NI Tables or the NI calculator on your Employer CD-ROM, you do not need to do anything else other than make yourself aware of the changes to the thresholds and earnings limits.

Lower Earnings Limit (LEL)
This is the minimum level of earnings that an employee needs to qualify for benefits, such as Retirement Pension and Jobseekers Allowance. If an employee’s earnings reach or exceed this level, but do not exceed the Earnings Threshold, they will not pay NICs but will be treated as having paid them when claiming benefit. For this reason, you must keep details of an employee’s earnings at or above the LEL on a form P11 or equivalent record and report them at the end of the year on a form P14.

Earnings Threshold (ET)
When the earnings exceed this level NICs become payable by the employee and employer.

This is set at the same level as the PAYE threshold.

Upper Earnings Limit (UEL)
Where earnings exceed the UEL, the employee pays NICs at 1% on those earnings above the UEL. The UEL does not apply to employer’s NICs, which are payable on all earnings above the ET, including those above the UEL, at the appropriate rate.

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Statutory Sick Pay (SSP)

The weekly rate of SSP is £72.55 for employees with average weekly earnings of £87 or more.

The SSP daily rate is the weekly rate of SSP divided by the number of qualifying days in the week and then multiplied by the number of qualifying days of incapacity in the week, rounded up to the nearest penny. For SSP purposes, weeks begin on Sunday and end on Saturday.

Recovery of SSP
In certain circumstances you may be able to recover some of the SSP you pay under the Percentage Threshold Scheme.

You can get back any SSP you have paid over and above 13% of your NICs liability for the same tax month in which you have paid SSP. For further information, see the Employer Helpbook E14(2007), What to do if your employee is sick.

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Statutory Maternity Pay (SMP)

Women expecting a baby on or before 31 March 2007 who satisfy the qualifying conditions are entitled to a maximum of 26 weeks SMP. These include having average weekly earnings of
Women expecting a baby on or after 1 April 2007 who satisfy the qualifying conditions are entitled to a maximum of 39 weeks SMP. These include having average weekly earnings of
The weekly rate is:

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Statutory Paternity Pay (SPP)

SPP is paid for a maximum of 2 weeks to employees who satisfy the qualifying conditions. These include having average weekly earnings of The weekly rate is the lesser of £112.75 or 90% of the employee’s average weekly earnings.

For more information see the Employer Helpbook E15(2007), Pay and time off work for parents if your employee is entitled to SPP because a baby was born. See the Employer Helpbook E16(2007), Pay and time off work for adoptive parents for more information if your employee is entitled to SPP because a child was being adopted in the UK or from abroad.

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Statutory Adoption Pay(SAP)

Employees who are adopting a child and are notified that they have been matched with a child or received official notification that they are eligible to adopt a child from abroad on or after1 April 2007 who satisfy the qualifying conditions are entitled to a maximum of 39 weeks SAP. These include having average weekly earnings of The weekly rate is the lesser of £112.75 or 90% of employee’s average weekly earnings.

For more information see Employer Helpbook E16(2007), Pay and time off work for adoptive parents.

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Funding of SMP/SPP/SAP

All employers are entitled to recover 92% of the SMP/SPP/SAP they pay.

If you qualify for Small Employer’s Relief you are entitled to recover 100% of the SMP/SPP/SAP you pay plus 4.5% for payments made on or after 6 April 2007.

The Small Employer’s Relief Threshold is £45,000 for payments made on or after 6 April 2007. For more information see the

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National Minimum Wage

From 1 October 2006 From 1 October 2007 For up to the minute information

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Collection of Student Loans

The Annual Threshold, below which Student Loan repayments are not due, is £15,000.

You can use the calculator on the CD-ROM or the SL3, Student Loan Deduction Tables, to calculate deductions.

There is more detailed guidance in the Employer Helpbook, E17, Collection of Student Loans.

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