Overview

Capital
London
Currency
Pound Sterling (GBP)
Date Format
dd/mm/yyyy

COVID-19

The Coronavirus Job Retention Scheme has been extended until September 30, 2021. Under the scheme, eligible furloughed employees can receive 80% of their wages, up to a maximum of GBP 2,500.

Employees who are sick with the Covid-19 virus or live with someone who is may be eligible for Statutory Sick Pay (SSP) of GBP 95.85 for up to 28 weeks.

If employees were unable to take all of their entitled holiday leave for reasons related to Covid-19, they are allowed to carry it over to the next two years.

Taxes

Employer

Employer Payroll Tax

National Insurance Rate
Category A
0.00%
£520 to £737 a month
13.80%
737.01 to £4,189 a month
13.80%
Over £4,189 a month
Employer

Employer Payroll Tax

National Insurance Rate
Category B - Married women and widows entitled to pay reduced National Insurance
0.00%
£520 to £737 a month
13.80%
737.01 to £4,189 a month
13.80%
Over £4,189 a month
Employer

Employer Payroll Tax

National Insurance Rate
Category C - Employees over the State Pension age
0.00%
£520 to £737 a month
13.80%
737.01 to £4,189 a month
13.80%
Over £4,189 a month
Employer

Employer Payroll Tax

National Insurance Rate
Category J - Employees who can defer National Insurance because they’re already paying it in another job
0.00%
£520 to £737 a month
13.80%
737.01 to £4,189 a month
13.80%
Over £4,189 a month

Employer Payroll Tax

National Insurance Rate
Category H - Apprentice under 25
0.00%
£520 to £737 a month
0.00%
737.01 to £4,189 a month
13.80%
Over £4,189 a month
Employer

Employer Payroll Tax

National Insurance Rate
Category M - Employees under 21
0.00%
£520 to £737 a month
0.00%
737.01 to £4,189 a month
13.80%
Over £4,189 a month
Employer

Employer Payroll Tax

National Insurance Rate
Category Z - Employees under 21 who can defer National Insurance because they’re already paying it in another job
0.00%
£520 to £737 a month
0.00%
737.01 to £4,189 a month
13.80%
Over £4,189 a month
Employer

Employer Payroll Tax

3.00%
Pension Fund
0.50%
Apprenticeship Levy (only applies to employers with payslips over 3 million GBP)
16.8% Total Employer Cost
Employee

Employee Payroll Taxes

National Insurance Rate
Category A
0.00%
£520 to £797 a month
12.00%
£797.01 to £4,189 a month
2.00% on the remaining amount
Over £4,189 a month

Employee Payroll Taxes

National Insurance Rate
Category B - Married women and widows entitled to pay reduced National Insurance
0.00%
£520 to £797 a month
5.85%
£797.01 to £4,189 a month
2.00% on the remaining amount
Over £4,189 a month

Employee Payroll Taxes

National Insurance Rate
Category C - Employees over the State Pension age
N/A
£520 to £797 a month
N/A
£797.01 to £4,189 a month
N/A
Over £4,189 a month

Employee Payroll Taxes

National Insurance Rate
Category J - Employees who can defer National Insurance because they’re already paying it in another job
0.00%
£520 to £797 a month
2.00%
£797.01 to £4,189 a month
2.00% on the remaining amount
Over £4,189 a month

Employee Payroll Taxes

National Insurance Rate
Category H - Apprentice under 25
0.00%
£520 to £797 a month
12.00%
£797.01 to £4,189 a month
2.00% on the remaining amount
Over £4,189 a month

Employee Payroll Taxes

National Insurance Rate
Category M - Employees under 21
0.00%
£520 to £797 a month
12.00%
£797.01 to £4,189 a month
2.00% on the remaining amount
Over £4,189 a month

Employee Payroll Taxes

National Insurance Rate
Category Z - Employees under 21 who can defer National Insurance because they’re already paying it in another job
0.00%
£520 to £797 a month
2.00%
£797.01 to £4,189 a month
2.00% on the remaining amount
Over £4,189 a month

Employee Payroll Taxes

5%
Pension Fund

Employee Income Tax

0%
Up to 12,500
20%
12,501 - 50,000
40%
50,001- 150,000
45%
Over 150,000
10.85% - 24.85% Total Employee Cost

Minimum Wage

General

The national hourly minimum wage is:

  • Age 23 and Over: 8.91 GBP
  • Age 21-22: 8.36 GBP
  • Age 18-20: 6.56 GBP
  • Age 16-17: 4.55 GBP
  • Apprentice Rate 4.62 GBP
Minimum wage (per month)
$4000
$2663
$2491
$1749
$47
$36.80
$2.33
Geneva
Luxembourg
Australia
United Kingdom
Malawi
Angola
Venezuela
3 HIGHEST
3 LOWEST

Payroll

Payroll Cycle

Salary should be paid monthly between the 25th – 30th of the month.

13th Salary

There is no 13th salary.

Working Hours

General

A normal working week is 48 hours.

Overtime

Employers can ask for workers consent, in writing, to opt out of the 48 hours weekly limit.

For an employee to work overtime it must be stated and agreed upon in the employment contract. Employers do not have to pay any overtime unless it is outlined in the contract.

Leave

Paid Time Off

Employers must give a minimum of 28 days paid leave per year. The Public holidays can be incorporated as part of the 28-day leave entitlement; however, it is common practice for employers to give more than 28 days.

If employees were unable to take all of their entitled holiday leave for reasons related to Covid-19, they are allowed to carry it over to the next two years.

 

Vacation days
Public holidays
3 HIGHEST
3 LOWEST
Brazil
Peru
Albania
United Kingdom
Michigan
China
Federal
30
13
43
30
12
42
28
14
42
28
8
36
2
11
13
5
7
12
10
10
Public Holidays

There are 8 public holidays in England, Wales and Scotland, and 10 in Northern Ireland.

Sick Days

Workers currently employed can receive £95.85 per week Statutory Sick Pay (SSP) for up to 28 weeks if they are too ill to work. For an employee to qualify they must be sick for four or more days in a row. Employees must receive the statutory minimum but may be entitled to more depending on the company’s sick pay scheme.

Employees must give their employer a doctor’s note if they have taken sick leave for more than 7 days in a row. This includes non-working days, such as weekends and bank holidays.

Employees who are sick with the Covid-19 virus or live with someone who is may be eligible for Statutory Sick Pay. 

Maternity Leave

Statutory maternity leave is 52 weeks and is comprised of:

  • Ordinary Maternity Leave – first 26 weeks
  • Additional Maternity Leave – last 26 weeks

Mothers are required to take off at least 2 weeks’ leave after the baby is born (or 4 weeks for factory workers) out of the entitled 52 weeks.

Unless the child is born early, the earliest that leave can be taken is 11 weeks before the expected week of childbirth.

Statutory Maternity Pay (SMP) is paid by the employer for up to 39 weeks with the employee receiving:

  • 90% of their average weekly earnings (before tax) for the first 6 weeks
  • £148.68 or 90% of their average weekly earnings (whichever is lower) for the next 33 weeks
PAID MATERNITY LEAVE (DAYS)
410
365
365
182
45
30
0
Bulgaria
Serbia
Albania
United Kingdom
United Arab Emirates
Tunisia
Federal
3 HIGHEST
3 LOWEST
Paternity Leave

Employees can choose to take either 1 week or 2 consecutive weeks’ leave. The allotted time off is the same regardless of the number of children (for example twins). Leave can’t start before the birth.

The statutory weekly rate of Paternity Pay is £148.68, or 90% of the average weekly earnings (whichever is lower).

Any money paid is done so in the same way as wages are paid, for example monthly or weekly. Tax and National Insurance will be deducted.

Parental Leave

Shared Parental Leave (SPL) and Statutory Shared Parental Pay (ShPP) is given to eligible employees who are having a baby or adopting.

  • Leave must be used in the first year the child is born
  • Up to 50 weeks of leave is shareable with up to 37 weeks of pay between the couple.
  • Leave can be taken in blocks, all at once, together as a couple, or separate

Termination

Termination Process

Dismissal can be deemed fair or unfair depending on reasoning and conduct.

 

Notice Period

Notice must be given based on what is stated in the employment contract or the statutory minimum, whichever is longer.

The statutory redundancy notice periods are:

  • at least one week’s notice if employed between one month and 2 years
  • one week’s notice for each year if employed between 2 and 12 years

Dismissal without notice can be utilized in cases of gross misconduct.

Employees on Fixed-term contracts which are ended ahead of the expiry date need to be given the statutory notice period.

Employers can pay in lieu of notice.

Severance Pay

The Coronavirus Job Retention Scheme has been extended until April 30, 2021. Under the scheme, eligible furloughed employees can receive 80% of their wages, up to a maximum of GBP 2,500.

Severance is only required in cases of Redundancy. Payment is statutory if an employee has been under contract for at least 2 years:

  • Half a week’s pay for each full year for employees under the age of 22
  • One week’s pay for each full year for employees between the ages of 22 to 41 years of age
  • One and half weeks’ pay for each full year for employees over the age of 41
  • Length of service is capped at 20 years
  • Weekly pay is capped at £525
Probation Period

There is no mandatory requirement but it is common to utilize a trial period of 3 to 6 months.

VAT

General

20% standard rate.

Version History

April 1, 2021
The national living wage has increased by 2.20%.

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    Questions & Answers

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    Ron P.
    Ron P.
    6 months ago

    What are the basic considerations for classifying someone as a contractor or an employee?

    Alex Margolin
    Admin
    6 months ago
    Reply to  Ron P.

    The basic differences between a contractor and an employee are in levels of control. An employer has more control over an employee, including directing how and where the work is done, not just the finished product. An employee cannot sub-contract the work to another person. A contractor is independent and (usually) self-employed, bearing the risk of profit or loss.

    If you have doubts about how someone at your company should be classified, speak to a local expert. Fines for misclassification can be substantial, even if it occurred unintentionally.

    See how Papaya Global can help you automate your global payroll or PEO whilst staying 100% compliant with local labor laws