Overview

Capital
London
Currency
Pound Sterling
Date Format
dd/mm/yyyy

calendar icon Public holidays calendar

Taxes

Employer
13.80% - National Insurance Rate
Up to 3% - Pension Fund
Employee
0% - Up to 11,850
20% - 11,850 - 46,350
40% - 46,350 - 150,000
45% - Over 150,000

Minimum Wage

General

The national hourly minimum wage is:

  • Under 18: £4.35
  • Age 18-20: £6.15
  • Age 21-24: £7.70
  • Age 25 and Over: £8.21

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.

VAT

General

20% standard rate.

Mandatory Benefits

Pension Fund

Mandatory contributions are as follows:

  • Employee – 5%
  • Employer – 3%
Social Security

National insurance is deducted from employers and employees and the amount of paid contributions depends on the employee’s category letter.

There are multiple categories, but most employees fall under category A.   

As of April 2020, there are two NI thresholds - primary and secondary.

Employees earning below £719 a month are exempt from the Employee NI contribution.

Employers will pay NI from the secondary threshold of £719 a month; i.e. the first £719 a month of the salary remains exempt from the Employer NI contribution.

 

Employee National Insurance Rates

Category letter

Up to £719 a month

£719.01 up to £4,167 a month

Over £4,167 a month

 

 

 

 

A

0%

12%

 

2%

 

B

0%

5.85%

 

2%

 

C

N/A

N/A

N/A

H

0%

12%

 

2%

 

J

0%

2%

2%

 

M

0%

12%

 

2%

 

Z

0%

 

2%

 

2%

 

 

 

 

 

 

Health Insurance

Employer National Insurance Rates

Category letter

Up to £719 a month

£719.01 to £4,167 a month

Over £4,167.01 a month

 

 

 

 

A

0%

 

13.8%

 

13.8%

 

B

0%

13.8%

 

13.8%

 

C

    0%

13.8%

 

13.8%

 

H

0%

12%

 

13.8%

 

J

0%

13.8%

13.8%

M

 

Z

0%

 

0%

0%

 

0%

13.8%

 

13.8%

 

 

 

 

 

     
Additional Benefits

Apprenticeship Levy: This will affect employers in all sectors. The levy will only be paid on annual payslips in excess of £3 million. The levy will be charged at a rate of 0.5% of an employer’s payslips. Each employer will receive an allowance of £15,000 to offset against their levy payment. 

Payroll

Payroll Cycle

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

Termination

Termination Process

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

Advance Notice

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

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