Below is a summary of the main legislative changes for 2016/2017
Codes with a suffix of 'L' will be increased by 40 points, codes with a suffix of 'M' will be increased by 44 points and codes with a suffix of 'N' will be increased by 36 points from 6th April unless a coding notice has been issued by HMRC. The emergency code for 2016/17 will be 1100L.
Scottish Rate of Income Tax (SRIT)
In December, the Scottish Government chose not to vary the rate of SRIT to the rest of UK tax rate.
We have developed our processes to accept prefix 'S' tax codes and to report to HMRC via RTI when these codes are operated on clients payrolls.
We will therefore be ready should the rate of SRIT be changed in subsequent tax years.
NIC Exemptions for Apprentices
As part of the Government's drive to promote approved apprenticeship schemes, from 2016/17 exemption to employer's NIC for apprentices under the age of 25 comes into effect.
Similar to the NIC scheme for employees under 21, the exemption only applies to earnings up to the upper earnings limit (or upper secondary threshold) of £827 per week.
Cessation of Contracted-out National Insurance Contributions
For those organisations with employees in occupational pension schemes where NIC is collected through contracted-out NIC tables (mainly table 'D'), from April 2016 these tables are no longer valid.
As part of a client's first process for 2016/17 all employees on contracted-out tables will be automatically switched to regular NIC tables, by PSC. For the most part, employees will switch from NIC table 'D' to NIC table 'A'.
The effect of this change will be higher employee NIC contributions, as core contributions under table 'D' were previously 10.6% compared to core contributions under table 'A' of 12%.
The Employment Allowance (EA) reclaim continues into 2016/17 and increases to £3,000. Notification of the reclaim to HMRC is done via RTI and PSC will continue to carry out this process on our client's behalf.
The entitlement criteria for reclaiming the EA remain unchanged:
The employment allowance will apply per employer, regardless of how many PAYE schemes an employer has in operation. Therefore, each employer can only claim for one allowance.
There are certain organisations (mainly those in the public service or supplying services to public service organisations) that cannot claim the allowance, so we would kindly ask you to consult www.gov.uk/employment-allowance if this category applies to your organisation.
DATES TO REMEMBER
6th April - New tax year commences
18th April - The generation of P60s begins
31st May - Statutory deadline for P11Ds
19th July - Payment of Class 1A NIC due