Payroll Alliance Spring Payroll Update 2016 - Linda Pullan, Payroll Alliance
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Transcript of Payroll Alliance Spring Payroll Update 2016 - Linda Pullan, Payroll Alliance
Spring Payroll Update 1
Hello & Welcome
Spring Payroll Update
Presenter: Linda Pullan
Head of Payroll Alliance
Payroll Alliance www.payrollalliance.com
Payroll Alliance 3 February 2016
Graduate & Corporate
Membership
Training Courses
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Key series Payroll Fact File NIC Handbook Pay & Benefits Manual
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We answer the phone quicker
than HMRC!
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
INCOME TAX
Personal allowances Tax Rates & Thresholds Transferable Allowances New Suffix Codes Form P45 Scottish Tax (SRIT)
Spring Payroll Update 5
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
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
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
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
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
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
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)
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
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
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
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
NATIONAL INSURANCE Thresholds & Rates
Ending of Contracting-Out
Under 21s NIC
Apprentices NIC
Employment Allowance
Recording NIC earnings
Spring Payroll Update 18
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
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
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?
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
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
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
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
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
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
STUDENT LOANS New type of loan
Deductions
Starters & leavers
Which one to apply
Spring Payroll Update 30
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
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
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
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
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
RTI Relaxation • 9 or fewer employees
• Report on or before
last payday in month
• Relaxation ends 5 April 2016
Spring Payroll Update 37
Any questions?
Linda Pullan [email protected]
www.payrollalliance.com
Payroll Alliance 3 February 2016