Belated Happy New Tax Year!
As always, there are plenty of changes that you need to be aware of for the new tax year, so grab a cuppa and I’ll take you through them.
The National Living Wage
From April 1st 2016, all Employees aged 25 and over must be paid at or above the new National Living Wage of £7.20 per hour. The National Minimums Wage Rates still apply for staff aged under 24 as follows:
16 & 17 Years Old £3.89 per hour
18 – 20 Years Old £5.30 per hour
21 – 24 Years Old £6.70 per hour
Apprentices (Under 19 or over 19 in First Year of Training) £3.30 per hour
www.gov.uk/national-minimum-wage-rates
Employment Allowance – Good News and Bad News
For many Employers eligible for the Employment Allowance it’s good news – the amount has been increased to £3,000 for the year.
Unfortunately though, for those of you who are Sole Directors of your own Limited Companies, you can no longer claim the Employment Allowance. It still does not apply to Nanny Employers either I’m afraid.
www.gov.uk/claim-employment-allowance
No More Employer National Insurance to Pay for Apprentices Under 25
If you employ an Apprentice under 25 and they earn less than £827 per week (which is rather an amazing wage for an Apprentice!) you do not need to pay Employer Class 1 National Insurance contributions for them. The Apprentice still needs to pay National Insurance at the normal rates if it applies. A new NI code “H” has been introduced for these Apprentices.
New PAYE Thresholds 2016/2017
TAX
The new Personal Allowance for tax purposes is £ 11,000.
The new “normal” tax coding is 1100L.
Employees on the “normal” coding can earn £ 916.67 per month before they will pay any tax.
SCOTTISH RATE OF INCOME TAX
The new Scottish Rates of Income Tax was introduced on April 6th. It applies to any employees who are resident in Scotland. The amount of tax deducted remains
the same as in the UK but half goes to the Scottish Government. Scottish Rate Tax Payers will have their tax codes starting with an S. Everything is picked up on the monthly submission to HMRC and they still take the full PAYE payment.
www.gov.uk/scottish-rate-income-tax
NATIONAL INSURANCE
Usually there is a small increase in the National Insurance thresholds, but not this year!
The Lower Earnings Limit (the amount at which Employees are entitled to statutory payments such as Statutory Sick Pay and Statutory Maternity Pay etc)
Remains at £112 per week / £486 per month.
Employee’s National Insurance Contributions kick in at £155 per week / £672 per month.
Employer’s National Insurance Contributions kick in at £156 per week / £676 per month.
(Don’t forgot the new increased Employment Allowance, the Under 21 and the new Apprentice ruling my help reduce the Employer NIC amounts though.)
Statutory Payment Rates 2016/2017
There are no changes to the Statutory Payment Amounts for the new tax year – rates remain the same as last year.
Statutory Sick Pay (SSP) £ 88.45 per week
Statutory Maternity Pay (SMP) 6 weeks of 90% of average earnings
Then 33 weeks at £ 139.58 per week (or 90% of average earnings if lower)
Statutory Paternity Pay (SPP) £ 139.58 per week (or 90% of average earnings if lower) (2 weeks maximum)
Statutory Adoption Pay (SAP) 6 weeks of 90% of average earnings
Then 33 weeks at £ 139.58 per week (or 90% of average earnings if lower)
The compensation for SMP, SPP and SAP remains at 103% if your total PAYE is less than £45,000 for the year.
It is 92% if your PAYE is more than £45,000.
Student Loans
A new threshold for Student Loan repayments has been introduced for students who started their Higher Education course after 1st September 2012.
This new threshold is £21,000 per annum / £1,750 per month.
For students who started their course pre 1st September 2012, the threshold is a lower £17,495 per annum / £1457.92 per month.
www.gov.uk/repaying-your-student-loan