Chancellor George Osborne has delivered his last Budget before the May 7 General Election.
The following are a few key points for Payroll:
- Personal Tax Allowance and basic rate limits
The tax-free personal allowance will rise to £10,600 this tax year and £10,800 in 2016/17. It will then further increase in April 2017 to £11,000. These increases from £6,475 in 2010 to £11,000 in 2017/18 will save a typical tax payer £905.
To make sure the full benefits of the personal allowance increase are passed on to higher rate taxpayers, the Government will also increase the point at which higher earners start paying 40% tax. It will increase by £315 in 2016/17 and by £600 in 2017/18 taking it to £43,300.
From 2016 to 2017, there will be one Income Tax personal allowance regardless of an individual's date of birth.
The National Insurance upper earnings and upper profits limits will rise to stay in line with the higher rate threshold.
Below is a table outlining the changes from last tax year to this:
- National Minimum Wage
From October 2015 the following will apply:
- the adult rate will increase by 20 pence to £6.60 per hour
- the rate for 18-20 years olds will increase by 17 pence to £5.30 per hour
- the rate for 16-17 year olds will increase by 8 pence to £3.87 per hour
- the apprentice rate will increase by 57 pence to £3.30 per hour
- the accommodation offset will increase by 27 pence to £5.35
- Employer's National Insurance Contributions for under 21's
rom 6 April 2015 every employer with employees under the age of 21 will no longer be required to pay Class 1 secondary (employer's) National Insurance Contributions on earnings up to the upper earning limit for those employees.
These changes will require the introduction of seven new NIC table letters and a new NIC threshold. PSC's systems will cope with this significant change seamlessly through internal software changes using the employee's birth date along with a number of other factors to correctly record, calculate and notify HMRC the exemptions that are in place.
- From April 2016 employers will be able to collect tax on certain employee benefits each pay period via the payroll.
Download the full Budget 2015 here