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United Kingdom 2022
Day Date Holiday Notes
Saturday Jan-1 New Year’s Day
Sunday Jan-2 New Year's Holiday Scotland only
Monday Jan-3 Day in lieu of New Year's Day Holidays falling on weekends are moved to the next working day.
Tuesday Jan-4 Day in lieu of New Year's Holiday Scotland only
Thursday Mar-17 St Patrick's Day Northern Ireland only
Friday Apr-15 Good Friday
Monday Apr-18 Easter Monday England, Wales & Northern Ireland
Monday May-2 Bank holiday
Thursday Jun-2 Bank holiday
Friday Jun-3 Platinum Jubilee
Tuesday Jul-12 Battle of Boyne Northern Ireland only
Monday Aug-1 Bank holiday Scotland only
Monday Aug-29 Bank holiday England, Wales & Northern Ireland
Monday Sep-19 Queens Funeral
Wednesday Nov-30 St Andrew's Day Scotland only
Sunday Dec-25 Christmas Day Holidays falling on weekends are moved to the next working day.
Monday Dec-26 Boxing Day
Tuesday Dec-27 Day in lieu of Christmas Day
Countrypedia

United Kingdom
Payroll and Benefits Guide

Last updated: May 22, 2022
Currency
Pound Sterling (GBP)
Payroll Frequency
Monthly
Employer Taxes
Unknown

Papaya Offers Complete Payroll, PEO and Contractor Management Services For United Kingdom

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Overview

Capital
London
Currency
Pound Sterling (GBP)
Date Format
dd/mm/yyyy
Fiscal Year
6 April - 5 April
Public holidays calendar

Contributions

Employer

Employer Payroll Contributions

National Insurance contributions (NIC) are based on a category letter
A

Most employees (other than those in other category letters below)

B

Married women/widows entitled to pay reduced NIC

C

Employees of State pension age

J

Employees who can defer NIC due to it being deducted from another job

H

An apprentice under the age of 25 years old

M

Employees under the age of 21 years old

Z

Employees under the age of 21 years old, who can defer NIC due to it being deducted from another job

Employer Payroll Contributions

Thresholds (Monthly)
533 GBP

Lower Earnings Limit (LEL)

823 GBP (increasing to 1048 GBP with effect from 6th July 2022)

Primary Threshold (PT)

758 GBP

Secondary Threshold (ST)

4,189 GBP

Category V (Veterans Upper Secondary Threshold – introduced 2021/2022) caps the ‘free band’ of earnings on which employers pay no NICs for veterans in their first year of civilian employment – same UEL as above. For 2021/22 employers pay over then claim the money back after year end – manual claim for most by letter to HMRC

2,083 GBP

Category F (Freeport Upper Secondary Threshold – introduced for 2022/2023) caps the ‘free band’ of earnings on which employers pay no NICs for freeport worker employed after 6th April 2022 who spend 60% or more of their time at the freeport premises valid for 3 years. UEL is 2,083 GBP per month

Employer Payroll Contributions

National Insurance Rate

Category A

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

15.05%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

15.05%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

3.00%

Employers Pension Contribution

18.05% Total Employers Cost

Employer

Employer Payroll Contributions

National Insurance Rate

Category B

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

15.05%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

15.05%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

3.00%

Employers Pension Contribution

18.05% Total Employers Cost

Employer

Employer Payroll Contributions

National Insurance Rate

Category C

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

15.05%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

15.05%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

3.00%

Employers Pension Contribution

18.05% Total Employers Cost

Employer Payroll Contributions

National Insurance Rate

Category F

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

0.00%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

15.05%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05% Total Employers Cost

Employer

Employer Payroll Contributions

National Insurance Rate

Category H

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

0.00%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

0.00%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05% Total Employers Cost

Employer Payroll Contributions

National Insurance Rate

Category I

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

0.00%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

15.05%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05% Total Employers Cost

Employer Payroll Contributions

National Insurance Rate

Category J

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

15.05%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

15.05%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05% Total Employers Cost

Employer

Employer Payroll Contributions

National Insurance Rate

Category L

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

0.00%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

15.05%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05% Total Employers Cost

Employer

Employer Payroll Contributions

National Insurance Rate

Category M

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

0.00%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

0.00%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05% Total Employers Cost

Employer

Employer Payroll Contributions

National Insurance Rate

Category V

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

0.00%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

0.00%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05% Total Employers Cost

Employer

Employer Payroll Contributions

National Insurance Rate

Category Z

0.00%

Earnings at or above lower earnings limit up to and including secondary threshold

0.00%

Earnings above secondary threshold up to and including Freeport upper secondary threshold

0.00%

Earnings above Freeport upper secondary threshold up to and including upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05%

Balance of earnings above upper earnings limit, upper secondary thresholds for under 21s, apprentices and veterans

15.05% Total Employers Cost

Employee

Employee Payroll Contributions

National Insurance Rate

Category A

0.00%

NIC letter A up to earnings at, or above Lower Earnings Limit, up to and including Primary Threshold

13.25%

NIC letter A earnings above Primary Threshold, up to and including Upper Earnings Limit

3.25%

NIC letter A Balance of earning above Upper Earnings Limit

5.00%

Employee Pension Contribution

16.50%- 21.50% Total Employee Cost

Employee Payroll Contributions

National Insurance Rate

Category B

0.00%

NIC letter B up to earnings at, or above Lower Earnings Limit, up to and including Primary Threshold

7.10%

NIC letter B earnings above Primary Threshold, up to and including Upper Earnings Limit

3.25%

NIC letter B Balance of earning above Upper Earnings Limit

5.00%

Employee Pension Contribution

10.35% - 15.35% Total Employee Cost

Employee Payroll Contributions

National Insurance Rate

Category C

N/A

NIC letter C up to earnings at, or above Lower Earnings Limit, up to and including Primary Threshold

N/A

NIC letter C earnings above Primary Threshold, up to and including Upper Earnings Limit

N/A

NIC letter C Balance of earning above Upper Earnings Limit

0.00 Total Employee Cost

Employee Payroll Contributions

National Insurance Rate

Category F

0.00%

Earnings at or above lower earnings limit up to and including primary threshold

13.25%

Earnings above the primary threshold up to and including upper earnings limit

3.25%

Balance of earnings above upper earnings limit

16.50% Total Employee Cost

Employee Payroll Contributions

National Insurance Rate

Category H

0.00%

Earnings at or above lower earnings limit up to and including primary threshold

13.25%

Earnings above the primary threshold up to and including upper earnings limit

3.25%

Balance of earnings above upper earnings limit

16.50% Total Employee Cost

Employee Payroll Contributions

National Insurance Rate

Category I

0.00%

Earnings at or above lower earnings limit up to and including primary threshold

7.10%

Earnings above the primary threshold up to and including upper earnings limit

3.25%

Balance of earnings above upper earnings limit

10.35% Total Employee Cost

Employee Payroll Contributions

National Insurance Rate

Category J

0.00%

Earnings at or above lower earnings limit up to and including primary threshold

13.25%

Earnings above the primary threshold up to and including upper earnings limit

3.25%

Balance of earnings above upper earnings limit

16.50% Total Employee Cost

Employee Payroll Contributions

National Insurance Rate

Category L

0.00%

NIC letter H up to earnings at, or above Lower Earnings Limit, up to and including Primary Threshold

3.25%

NIC letter H earnings above Primary Threshold, up to and including Upper Earnings Limit

3.25%

NIC letter H Balance of earning above Upper Earnings Limit

6.50% Total Employee Cost

Employee Payroll Contributions

National Insurance Rate

Category M

0.00%

NIC letter M up to earnings at, or above Lower Earnings Limit, up to and including Primary Threshold

13.25%

NIC letter M earnings above Primary Threshold, up to and including Upper Earnings Limit

3.25%

NIC letter M Balance of earning above Upper Earnings Limit

16.50% Total Employee Cost

Employee Payroll Contributions

National Insurance Rate

Category Z – Employees under 21 who can defer National Insurance because they’re already paying it in another job

0.00%

NIC letter Z up to earnings at, or above Lower Earnings Limit, up to and including Primary Threshold

3.25%

NIC letter Z earnings above Primary Threshold, up to and including Upper Earnings Limit

3.25%

NIC letter Z Balance of earning above Upper Earnings Limit

6.50% Total Employee Cost

Employee Income Tax

0%

Up to 12,570

20%

12,571 – 37,700

40%

37,700 – 150,000

45%

Over 150,000

Employer

Employer Payroll Contributions

Apprenticeship Levy

The UK government apprenticeship levy is a form of taxation designed to help companies offer more apprenticeships. It was introduced to benefit businesses by boosting essential training and developing apprenticeship programs.  The government apprenticeship levy is a tax paid by employers. It is then stored in a fund that can be accessed to help pay for apprenticeship training costs.

It applies to those companies with a payroll of more than £3 million (the apprenticeship threshold).  The levy is charged at 0.5% of an employer’s total payroll (apprenticeship levy allowance) and is collected monthly through PAYE.

Minimum Wage

General

The national minimum wage in the United Kingdom is dependent on the age of the employee:

  • Employees aged 23 and over receive a minimum wage of 9.50 GBP
  • Employees aged 21 – 22 receive a minimum wage of 9.18 GBP
  • Employees aged 18 – 20 receive a minimum wage of 6.83 GBP
  • Employees ages under 18 receive a minimum wage of 4.81 GBP
  • Employees who are apprentices receive a minimum wage of 4.81GB

Payroll

Payroll Cycle

In the United Kingdom, the payroll frequency is typically monthly, with salary payments made between the 25th and 30th of each month.

13th Salary

In the United Kingdom, there are no statutory provisions for 13th-month salary payments.

Working Hours

General

The standard working week consists of 40 hours and cannot exceed a maximum of 48 hours averaged over 17 weeks.

Overtime

All work above the standard working hours a week is to be paid as overtime and is regulated by employment contract/collective agreements etc. When an employee is requested to work overtime or work on holidays, employers may request this of employees in writing.

All overtime hours in excess of 48 hours a week are paid at an overtime compensation rate; this rate is stipulated in the employment contract/collective agreements. The hourly overtime rate cannot fall below the national minimum wage.

Working Week

Monday-Friday

Leave

Paid Time Off

The annual leave entitlement is 28 days of paid leave per year for full-time employees. Bank holidays are included in the annual leave entitlement.

Employers may offer additional leave at their discretion; this must be outlined in the employment contract.

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.

Public Holidays

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

Sick Days

Employees can receive up to 28 weeks of paid sick leave; this is compensated at 99.35 GBP per week Statutory Sick Pay (SSP) as a minimum, this is not payable for the first three days of any sickness absence. Employers may compensation varies depending on the company’s sick pay scheme.

If the employee’s sick leave exceeds seven days, including weekends and bank holidays, the employee must provide a professional medical doctor certificate.

An employee may also be entitled to contractual sick pay (that is, pay during sick leave at a higher rate than SSP) if the employer offers this benefit.

Maternity Leave

In the United Kingdom, female employees receive 52 weeks of statutory maternity leave, 26 weeks of ordinary leave, followed by 26 weeks of additional maternity leave.

An employee is not required to use the full 52 weeks of leave; however, the employee must take at least two weeks following the child’s birth; this may vary depending on the employee’s sector.

Mothers are compensated by Statutory Maternity Pay (SMP) for up to 39 weeks at the rate of 90.00% of the employee’s average weekly earnings for the first six weeks, and 156.66 GBP or 90.00% of the employee’s average weekly earnings, whichever is lower) for the following 33 weeks.

Paternity Leave

Employees are entitled to one to two weeks of paid paternity leave, which begins after the child’s birth. Employees receive Statutory Paternity Pay of 156.66 GBP, or 90.00% of the employee’s average weekly earnings, whichever is lower, per week of leave.

Parental Leave

Parents in the United Kingdom may be entitled to Shared Parental Leave (SPL) when adopting a child or following the birth of a child. Shared Parental Leave allows parents up to 50 weeks of leave they can share; 37 weeks of pay is possible. Employees must take leave within the first year of the child’s birth.

Other Leave

Depending on the employment contract, an employee may be allowed additional leave, as approved between the employer and employee, for the following:

  • Bereavement leave: In the UK in the event of the death of an immediate family member, an employee is entitled to bereavement leave of up to three days (the employment contract will stipulate whether this is paid or unpaid leave).
  • Jury Service Leave: Employers to provide their full-time regularly employed employees, job-protected, unpaid leave for their duty as jurors or as a witness in a case, or acting as a plaintiff or defendant in the courts. Employees must provide a copy of the jury summons to the employer as evidence of requirement.  The court will provide a specific amount of payment and the employer can choose to provide any additional payment.
  • Public Duties Leave: Employees are entitled to a reasonable unpaid amount of time off to perform public duties, for example, if they are:
  • a magistrate (also known as a justice of the peace)
  • a school governor
  • a member of any statutory tribunal
  • a member of the managing or governing body of an educational establishment

Termination

Termination Process

The termination process varies according to the employment agreement and collective agreement in place and is based on the type of contract and reason for termination. Dismissals can be deemed fair or unfair depending on the reasoning and conduct of the termination.

Notice Period

In the United Kingdom, notice periods are outlined with the employment contract or the statutory minimum, whichever is longer.

For redundancy the statutory notice period is at least one week’s notice if an employee has been employed for between one month and 2 years and one week’s notice for each year of service between 2 years and 12 years of employment.

In the case of gross misconduct, a dismissal without notice is possible.

Employers can pay in lieu of notice.

Severance Pay

Severance pay is only required in the case of redundancy. The amount of severance is dependent on the age of the employee, if they have served at least two years of service as follows:

  • 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 571 GBP

Probation Period

There are no statutory provisions for probation periods in the United Kingdom; these are outlined in the employee’s employment contract. Commonly, probation periods last between three and six months.

VISA

VISA

If employers want to recruit from outside the UK, workers need to meet certain requirements and apply for the appropriate visa first; each visa has different requirements. Employers need to have a sponsor license to hire most workers outside the UK – which can take several weeks to process. Following the end of the Brexit transition period, from 1 January 2021, the free movement of persons between the UK and EU has ended. The UK has introduced an immigration system that treats all applicants equally, regardless of their country. Also effective from this date, Citizens of the European Union, Switzerland, Norway, Iceland, and Liechtenstein can apply for the EU Settlement Scheme.

Foreigners can visit the UK for up to 6 months without a visa to travel, visit family and friends, undertake short-term studies, attend job interviews, etc.

For longer stays, foreigners need to apply through the UK immigration points-based system via the UK government to score the necessary points for entry eligibility criteria must be met. This system aims to prioritise skills and talent over where someone comes from. Irish citizens need not apply for a work permit to live and work in the UK, as free movement, rights, and privileges between these countries continue to be protected by the Common Travel Area arrangements. In most cases, to be eligible to come and work in the UK, a confirmed job offer is required or written confirmation of transferring to the employer’s UK office.

There are many types of work visas for the UK, for both short- and long-term stays. All require different information regarding the foreigners’ skills and qualifications depending on the job being offered/sponsorship, the type of work involved, and whether there will be a requirement to bring the family.

The most requested long-term work visas in the UK include:

Skilled Worker – allows holders of this visa to live or stay in the UK and work in a qualifying role with an approved employer. The visa is valid for up to 5 years before renewal is needed. To be able to get this type of visa, a confirmed job offer is essential. The role must also be in a reported list of eligible occupations on the government website.

Intra-company – Transfer or Graduate Trainee – these are the visas for foreigners being transferred to the UK. There’s also an intra-company visa specifically designed for graduate trainees being transferred as part of a program for managerial or specialist roles.

The role must also be in a reported list of eligible occupations on the government website. The amount of time allowed to stay depends on many factors, as detailed on the government website.

Health and Care Worker – a long-term visa designed for medical professionals coming to the UK to do an eligible job with the NHS, an NHS supplier, or adult social care. There are minimum criteria that an employee must meet to be eligible, together with a confirmed job offer. This role is valid for five years before renewal.

A ‘certificate of sponsorship’ from the Home Office, approved by an employer, is also a prerequisite for all these visas.

The process takes between 3-8 weeks, and the costs associated with applying for the right to work in the UK differ depending on the type of visa or permit but are usually made up of an application fee, a healthcare surcharge, and a minimum amount of money as initial settlement/support.

The UK government has announced the implementation of a new visa scheme for ‘high potential individuals’ to allow people from top universities to work in the UK for 2 years – or 3 years if they hold a Ph.D. – and to switch to other long-term employment visas at the end of this period if they meet certain requirements. The scheme is open to all eligible graduates, regardless of nationality, and a prior job offer is not required.

VAT

General

The standard rate of VAT in the United Kingdom is 20.00%

Version History

July 25, 2022
Visa - The UK government has announced the implementation of a new visa scheme for ‘high potential individuals’ to allow people from top universities to work in the UK for 2 years - or 3 years if they hold a Ph.D. – and to switch to other long-term employment visas at the end of this period if they meet certain requirements. The scheme is open to all eligible graduates, regardless of nationality, and a prior job offer is not required.
May 22, 2022
Payroll contributions and personal income tax rates have been updated.
Minimum wages have increased.
April 6, 2021
Employee income tax thresholds changed. Minimum earnings for paying income tax start at 12,570 GPB
April 1, 2021
The national living wage has increased by 2.20%.
Stay up to date on payroll & employment law changes

Questions & Answers

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Ron P.
Ron P.
1 year ago

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

Admin
1 year 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.

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