Payroll Alliance Spring Payroll Update 2016 - Linda Pullan, Payroll Alliance
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The Spring Payroll Update is a must for payroll. An essential guide for the new Tax Year on the changes to tax, National Insurance, statutory payments etc and the new Living Wage.
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Payroll Alliance Spring Payroll Update 2016 - Linda Pullan, Payroll Alliance
- 1. Spring Payroll Update 1 Hello & Welcome Spring Payroll Update Presenter: Linda Pullan Head of Payroll Alliance
- 2. Payroll Alliance www.payrollalliance.com Payroll Alliance 3 February 2016 Graduate & Corporate Membership Training Courses Customised In House Training Accredited Payroll Qualifications
- 3. Membership Packages Silver Technical helpdesk Pay & Benefits magazine Working Meetings Key Series Payroll Fact File NIC Handbook 10% discount on qualifications 15% discount on training 20% discount on recruitment £485 Payroll Alliance 3 February 2016 Gold Technical helpdesk Pay & Benefits magazine Working Meetings Key series Payroll Fact File NIC Handbook Pay & Benefits Manual 10% discount on qualifications 15% discount on training 20% discount on recruitment £599 Gold Online Technical helpdesk Pay & Benefits magazine Working Meetings Online access to: Key series Payroll Fact File NIC Handbook Pay & Benefits Manual 10% discount on qualifications 15% discount on training 20% discount on recruitment £525 Diamond Technical helpdesk Pay & Benefits magazine Working Meetings Online access (x2) to: Key series Payroll Fact File NIC Handbook Pay & Benefits Manual 2 days free training 10% discount on qualifications 15% discount on training 20% discount on recruitment £1050 We answer the phone quicker than HMRC!
- 4. This Afternoon’s Programme • Tax rates and allowances • NICs new rates and table letters • Statutory Payments • NMW & NLW • Student Loans • RTI • Auto enrolment Spring Payroll Update 4
- 5. INCOME TAX Personal allowances Tax Rates & Thresholds Transferable Allowances New Suffix Codes Form P45 Scottish Tax (SRIT) Spring Payroll Update 5
- 6. Personal Allowances 2016/17 Personal Allowance £11,000 Income Limit for Personal Allowance £100,000 Married Couples Allowance Maximum amount £8,355 Minimum amount £3,220 Blind Person’s Allowance £2,290 Spring Payroll Update 6
- 7. Spring Payroll Update 7 PAYE • Emergency tax code 1100L operated cumulatively or on a week 1 / month 1 • PAYE Threshold £212 p.w. £917 p.m. • Age related allowances ends for those born after 5 April 1938 • Suffix ‘Y’ tax codes no longer in use from April 2016
- 8. Tax Rates & Thresholds 2015/16 2016/17 • 20% • £0 - £31,785 Basic Rate • 40% • £31,786 - £150,000 Higher Rate • 45% • Over £150,000 Additional Rate Spring Payroll Update 8 • 20% • £0 - £32,000 Basic Rate • 40% • £32,001- £150,000 Higher Rate • 45% • Over £150,000 Additional Rate
- 9. Transferable Allowances • Unused allowance transferred • Married couples and civil partners • Both must be basic rate taxpayers • Up to 10% of Personal allowance (£1,100) • Reduces tax up to £220 per year • Digital applications online through GOV.UK • Suffix letters • ‘N’ for the transferor (990N) • ‘M’ for recipient (1210M) • Uplifts part of P9X Spring Payroll Update 9
- 10. Future of the P45? • HMRC confirm layout to remain unchanged • Considering how process can be improved • Stocks of paper forms still valid • Employers can provide form electronically Spring Payroll Update 10
- 11. Scottish Rate of Income Tax Spring Payroll Update 11
- 12. Scottish Tax • Scottish tax rates from 6 April 2016 (SRIT) • Replaces Scottish Variable Rate (SVR) • Administered by HMRC • Applies to ‘Scottish taxpayers’ • SRIT calculated by reducing rates by 10p • Basic rate – 10p • Higher rate – 30p • Additional rate – 35p • Scottish Parliament - Power to set higher or lower rates than rest of UK (rUK) Spring Payroll Update 12
- 13. SRIT • 16 December 2015 - Scottish Parliament announce SRIT • 2016/17 SRIT rate = 10% Spring Payroll Update 13 Taxable Income rUK rate SRIT rate Basic Rate £0 - £32,000 20% 10%(rUK) + 10%(SRIT) Higher rate £32,001 - £150,000 40% 30%(rUK) + 10%(SRIT) Additional Rate Over £150,001 45% 35%(rUK) + 10%(SRIT)
- 14. Definition • Where you live, Not…where you work • Resident in UK for tax and…. • Main place of residence in Scotland for majority of tax year • Or… if they cannot identify a main place • Spends more days in Scotland than rest of the UK • Or …is a Scottish Parliamentarian Spring Payroll Update 14
- 15. What does this all mean? • HMRC began contacting 2.2m ‘Scottish’ taxpayers in December 2015 • Where tax records show residence in Scotland • Employee should contact HMRC if they disagree • Employers will receive P9 changes indicating ‘S’ tax codes (S1100L) Spring Payroll Update 15
- 16. What does this all mean? • No Scottish emergency code or NT • New starters assigned ‘S’ codes after 1st FPS • Use all the following without change • P45s • W1/M1 codes • Regulatory Limit • Deduction for payments to sub-contractors Spring Payroll Update 16
- 17. SRIT Payers • Scottish Government asked SRIT to be shown separately on P60s • HMRC stated no requirement to show SRIT separately • SRIT to be shown separately on individual tax summaries (Personal Tax Statements) • Scotland Bill 2015 provides Scottish Parliament with total authority in setting rates and thresholds • May come into effect from 6 April 2017 Spring Payroll Update 17
- 18. NATIONAL INSURANCE Thresholds & Rates Ending of Contracting-Out Under 21s NIC Apprentices NIC Employment Allowance Recording NIC earnings Spring Payroll Update 18
- 19. NIC Thresholds and Limits 2016/17 LEL PT ST UEL/UST/ AUST Weekly 112.00 155.00 156.00 827.00 2 weekly 224.00 310.00 312.00 1,654.00 4 weekly 448.00 620.00 624.00 3,308.00 Monthly 486.00 672.00 676.00 3,583.00 Annual 5,824.00 8,060.00 8,112.00 43,000.00 Spring Payroll Update 19
- 20. National Insurance • Upper Accrual Point (UAP) no longer applies from 6 April 2016 • Apprentices Upper Secondary Threshold (AUST) • NIC Categories 2016/17 – A, B, C (Not Contracted Out) – H (apprentices under 25) – J (Deferment) – M (Under 21s Standard Rate) – Z (Under 21s Deferment) • No change to percentage rates Spring Payroll Update 20
- 21. The End of an Era!! • Contracting-Out of S2P ends 5 April 2016 • From 6 April 2016 ALL employees will be …….. Not Contracted-Out? • State pension changes to single-tier • NI Rebates 1.4% & 3.4% removed • UAP no longer required Spring Payroll Update 21 Do your employees fully understand the effects?Do You?
- 22. Employer NICs for Under 21s • Employee aged 16 or over & under 21 • No Employer Class 1 NICs up to UST • UST same as UEL for 2016/17 • UST could change in future tax years • Date of payment determines NIC Spring Payroll Update 22
- 23. Apprentices Under 25 • 0% Employer NICs up to AUST • Legislative power to alter age • Definition of apprentice s.9B of SSCBA 1992 • Agreement between apprentice, employer and training provider • Apprentice levy due April 2017 – 0.5% of wage bill – On earnings above £3M – Paid through PAYE Spring Payroll Update 23
- 24. Recording NI Earnings • Abolishment of Contracted-Out • 3 NI earnings bands – > LEL – LEL – PT – PT – UEL • No reporting of SCON & ECON • The cost of abolishing C/Out Spring Payroll Update 24
- 25. Employment Allowance • From 6th April 2016 • Increases from £2k to £3K • Can be claimed up to 4yrs after end of tax year • Exemption extended to sole director employee businesses www.gov.uk/claim-employment-allowance Spring Payroll Update 25
- 26. STATUTORY PAYMENTS SSP SMP SAPSPP ShPP Spring Payroll Update 26 No Rate Changes for 2016/17
- 27. MINIMUM WAGE NMW rates NMW Penalties National Living Wage Spring Payroll Update 27
- 28. National Minimum Wage Spring Payroll Update 28 Age From 1st Oct 2014 From 1st Oct 2015 16 to 17 years old £3.79 £3.87 18 to 20 years old £5.13 £5.30 21 years and over (adult rate) £6.50 £6.70 Apprentice rate £2.73 £3.30 Accommodation Offset (daily rate) £5.08 £5.35
- 29. National Living Wage (NLW) • From 1st April 2016 • NLW payable to all workers aged 25 and over • NLW rate £7.20 per hour • Employers should prepare: – Know who it applies to – Amend rates of pay – Communicate to workers • NLW will be enforced! Spring Payroll Update 29
- 30. STUDENT LOANS New type of loan Deductions Starters & leavers Which one to apply Spring Payroll Update 30
- 31. New Student Loan Deduction • New Plan Type 2 loan from 6 April 2016 – England and Wales only • Plan Type 1 loans – Taken out before Sept 2012 • Plan Type 2 loans – Taken out during or after Sept 2012 • Start Notices (SL1) will indicate plan type • Only Plan 1 or 2 to be operated at any one time • New Student Loan Tables • Students ceasing education between Sept 2012 - April 2016…dealt with SLC directly Spring Payroll Update 31
- 32. Thresholds 2016/17 Plan Type 1 Threshold Weekly £336.44 2 Weekly £672.88 4 Weekly £1,345.76 Monthly £1,457.92 Annual £17,495 Plan Type 2 Threshold Weekly £403.84 2 Weekly £807.68 4 Weekly £1,615.36 Monthly £1,750.00 Annual £21,000 Spring Payroll Update 32 Deduction = 9% above thresholds Plan Type 1 Threshold will continue to increase in line with RPI Plan Type 2 Threshold frozen until April 2021 No change to RTI reporting requirements
- 33. Knowing Which Plan Type to Operate • Starters – Ask employee which plan – New starters checklist from 6 April – No change to P45 – Use Plan Type 1 as default – Employee should contact SLC • Leavers – P45 - Item Box 5 – Enter ‘Y’ • Which deduction to apply? – Employee could have both – Only operate one deduction type – Could receive new SL1 – changing plan type Spring Payroll Update 33
- 34. Auto-Enrolment Thresholds 2016/17 Weekly 2 Weekly 4 weekly Monthly Annual Earnings Trigger £192 £384 £768 £833 £10,000 Lower level of qualifying earnings £112 £224 £448 £486 £5,824 Upper level of qualifying earnings £827 £1,654 £3,308 £3,583 £43,000 Spring Payroll Update 34
- 35. Auto-Enrolment Simplification Technical changes since April 2015 Exceptions – Reduce assessment of all categories – Facilitate one individual communication – Reduce information requirements • Tax Protected Status • Auto Re-Enrolment – Every 2 years 9 months Spring Payroll Update 35
- 36. Spring Payroll Update 36 REAL TIME INFORMATION Reporting Relaxation
- 37. RTI Relaxation • 9 or fewer employees • Report on or before last payday in month • Relaxation ends 5 April 2016 Spring Payroll Update 37
- 38. Any questions? Linda Pullan linda.pullan@lexisnexis.co.uk www.payrollalliance.com Payroll Alliance 3 February 2016