As the new tax year begins on 6 April 2025, HMRC has confirmed a few key updates to the PAYE system that every employer and employee should be aware of.

First, the income tax thresholds are staying exactly the same. That means the personal allowance remains at £12,570, and the basic and higher rate bands are unchanged. While this might sound like stability, it could actually result in higher tax bills for some, especially if wages go up and push people into higher bands.

The good news is that National Insurance contributions are dropping again. Employees will now pay just 8%, down from 10% last year. Employers, however, will continue paying the same 13.8%. The Employment Allowance also remains fixed at £5,000, giving small businesses some continued relief.

Most employees will see a tax code of 1257L for the new year. Employers should double-check their payroll software to make sure all codes are updated before running April payroll. It's a small task that can prevent big headaches later.

For those repaying student loans, thresholds are changing slightly too. Plan 1 now starts at £24,990, Plan 2 at £27,295, Plan 4 at £31,395, and postgraduate loans will apply above £21,000. Employers need to ensure they’re using the right plan type for each employee.

Don’t forget those key payroll deadlines either—P60s must be issued by 31 May, and any P11D forms for employee benefits need to be submitted by 6 July.

Staying compliant doesn’t have to be complicated. At Prime Pay UK, we keep it simple and stress-free so you can focus on running your business. Get in touch at info@primepayuk.co.uk