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Payroll taxes in the UK.

Learn about payroll taxes in the UK thanks to Horizons’ up-to-date guide.

Horizons is where real, local hiring expertise meets world-class customer service. Quickly and compliantly hire employees in more than 150 countries worldwide, without the need to open a local entity.

What is the average employer tax rate in the UK?

The corporate tax rate in the UK is 19%.

What is the average employee tax rate in the UK?

Employees in the United Kingdom must pay the applicable rate of income tax, based on their salary and location.

  • Employees in England, and Northern Ireland:
  • Up to £12,570 = 0% tax

  • £12,571 to £50,270 = 20% tax

  • £50,271 to £150,000 = 40% tax

  • Over £150,000 = 45% tax

  • Employees in Scotland:

  • Up to £12,570 = 0% tax

  • £12,571 to £14,732 = 19% tax

  • £14,733 to £25,699 = 20% tax

  • £25,689 to £43,662 = 21% tax

  • £43,663 to £150,000 = 41% tax

  • Over £150,000 = 46% tax

  • Employees in Wales:

  • Up to £12,570 = 0% tax

  • £12,571 to £37,700 = 20% tax

  • £37,700 to £150,000 = 40% tax

  • Over £150,000 = 45% tax

For example, an employee earning £65,000 in England would pay approximately £13,432 amount of income tax per year. The first £12,570 is tax free, they will pay £7,540 on the next £37,700 and then £5,892 on the remaining £14,730.

Employer contributions in the UK

Employers must contribute towards National Insurance (including the Health and Social Care Levy), and these contributions total roughly 13.8% of each employee’s salary.

Employee contributions in the UK

Employees must contribute towards National Insurance, and these contributions total roughly 13.25% on earnings above £190 per week and 3.25% on additional earnings above £967 per week

Frequently asked questions

The tax bureau of the United Kingdom is called HMRC – His Majesty’s Revenue and Customs.

There is no employer payroll tax contribution in the UK, but employers must make National Insurance contributions based on the employee’s earnings.

The payroll tax payment system in the UK is known as PAYE (Pay As You Earn). Employers are responsible for withholding income tax from their employees’ wages and sending it to HM Revenue and Customs (HMRC).

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