Legislation Changes 2016-2017

With the new tax year fast approaching, I thought I would give you a summary of all the new legislation changes.  Feel free to print or save a copy for your records.

Employment allowance will continue into the 2016/2017 tax year, and notification is to be done the same way as previous tax years, with it being sent by RTI to the HMRC.  With this being the case, this is the biggest change that I, as an Employer noticed.  Previously if you met the specific criteria to become eligible for Employment allowance you as an Employer could reclaim up to £2000 of your employer’s national insurance bill. There are certain organisations (mainly those in the public service or supplying services to public service organisations) that cannot claim the allowance, if this applies to your organisation you can visit www.gov.uk/employment-allowance to see what can be done.

Effective from the 6^th April 2016 this is due to increase by a further £1000, allowing employers the right to claim up to £3000.  This extra allowance will be a great help to small and micro employers, not only because of the monetary value but allowing the opportunity to grow and potentially hire new staff.

TAX

There have been some slight changes to tax codes and the bandwidths in the new year, these are as follows;

• Codes with a suffix of L will be increased by 40 points.
• Codes with a suffix of M will be increased by 44 points
• Codes with a suffix of N will be increased by 36 points
• The emergency tax code will be 1100L

All of these changes will take place in the 2016/17 tax year effective from the 6^th April unless a coding notice has been sent by the HMRC.   Unfortunately, most of the bandwidths are to remain the same apart from the basic rate, this will increase by £215.  Below is a table so it’s easier for you to see these changes.

Basic Rate (20%)	£1 to £32,000
Higher Rate (40%)	£32,001 TO £150,000
Additional Rate (45%)	£150,001 above

Scottish Rate of Income Tax (SRIT) In December, the Scottish Government chose not to vary the rate of SRIT to match that of the UK rate, therefore it will remain the same.

NIC

The only change to NIC is the Upper Earnings Limit where we can see another increase;

Lower Earnings Limit	£112 a week
Primary Threshold	£115 a week
Secondary Threshold	£156 a week
Upper Earnings Limit	£827 a week

The Biggest change to National Insurance this tax year is the government backing and promoting apprentice schemes in the UK.  With this being the case from 2016/2017 exemption to employer’s NIC for apprentices under the age of 25 is coming into effect.

This will be very similar to the NIC scheme for employees under 21 which they brought into effect last tax year, with the exemption only applying to earnings up to the upper earnings limit of £827 per week.

Statutory Payments

All the statutory rates remain the same and to qualify you still have to earn over the LEL of £112 weekly. I am a little surprised that they have stayed the same as we do normally see a slight increase each year, these are as follows;

• Statutory Sick Pay-standard rate per week £88.45
• Statutory Paternity Pay-standard rate per week £139.58
• Statutory Maternity Pay-standard rate per week £139.58

Cessation of Contracted-out National Insurance Contributions

For companies with employees in occupational pension schemes where NIC is collected through contracted out NIC tables, mainly table D.  From 6^th April 2016 these tables will no longer be in use.  With this being the case, most employees will be switched from table D to table A.  The effect this will have on your employees, will be a higher employee contribution.  This is because under table D contributions were made at 10.6% whereas table A are made at 12%.

Student Loan

There is also changes to how student loan will be calculated this year, from 6 April 2016, there are two types of student loan repayment plans; Plan 1 and Plan 2.

For any loan repayments due to start from 6 April 2016, the SL1 notification you receive from HMRC will specify which repayment plan the employee is to be on.

Payroll Benefits

If as an employer you provide benefits in kind otherwise known as BIKs to your employees, the way you report this to the HMRC is changing. Benefits in kind can be such things like; company cars and health insurance.  You can now complete a P11D for each employee who receives one of these benefits as normal, or you can now include the cash equivalent value of the benefit in payroll and deduct the required amount of tax.

If you provide benefits in kind (BIKs) to your employees, for example company cars or health insurance, the way you report this to HMRC is changing. You can either complete a form P11D for each employee who receives a BIK, or include the cash equivalent value of the benefit in the payroll and deduct the required tax.

If you wish to record your benefits through payroll instead of completing a P11D, you must register with the HMRC Payrolling Benefits in Kind online service. To be able to do this for the 2016/2017 tax year you must register with the HMRC before the 6th April 2016.

As a last little part of this blog, here are some key dates to remember;

6th April - New tax year commences

18th April - The generation of P60s begins

19th April – Final submission of the 2015/16 tax year is due

31st May - Statutory deadline for P11Ds

19th July - Payment of Class 1A NIC due

That basically is your legislative changes for the new tax year.  If you have any further questions about these changes or worried about how you’re going to implement them.  Even if it’s as little as how they might affect you as an employer, we are happy to give free advice, email info@chrysalispayroll.co.uk, to see how we can help.