STATUTORY CHANGES FOR THE 2015/2016 TAX YEAR EFFECTIVE 6TH APRIL 2015
National Insurance £2,000 Employment Allowance
This will continue to be applied automatically to your payroll if you are eligible, and will be offset against the Employer’s National Insurance liability on your monthly/quarterly P32 report, up to a total value of £2,000 for 2015/2016.
The annual personal allowance increases from £10,000 to £10,600. This gives a monthly tax-free amount of £883.33.
The tax bands for 2015/2016 are:
Basic Rate 0 – £31,785 20%
Higher Rate £31,786 – £150,000 40%
Additional Rate over £150,0000 45%
If an employee believes that their new tax coding is incorrect, they should contact the Employee Helpline on 0300 200 3300 (8.00 am – 8.00 pm Monday – Friday, 8.00 am – 4.00 pm Saturday).
National Insurance Rates
The Lower Earnings Level for weekly paid employees rise to £112.00, for Monthly employees it will rise to £486.00, and for Annual employees it will be £5824.00.
The employee’s rate of NI remains unchanged at 12%. The monthly NI free amount for employees rises from £663.00 to £672.00. Earnings over the upper earnings limit of £42,385.00 remains at 2%.
Employers National Insurance remains unchanged at 13.8%. The monthly NI free amount for employers increases from £663.00 to £676.00.
Any employees under 21 years old will no longer have to pay Class 1 secondary NIC on earnings up to the Upper Secondary Threshold (UST) for those employees. This comes into effect from 6 April 2015.
Student Loan Deductions
The Student Loan threshold from 6th April 2015 will be £17335.00. The repayment rate remains unchanged.
Statutory Sick Pay
The Statutory Sick Pay standard weekly rate will increase from £87.55 to £88.45, however small employers will no longer be able to reclaim any SSP from HMRC as the Percentage Threshold Scheme for recovery of SSP was abolished from 6 April 2014.
Statutory Maternity Pay, Paternity Pay and Adoption Pay
The first six weeks of maternity pay remains at 90% of an employee’s average weekly
earnings. The next 33 weeks are payable at the new rate of £139.58 a week (currently £138.18 a week). If an employee’s average weekly earnings are lower than the statutory amount, they will receive the lower amount for 39 weeks. There is no change to the amount of SMP/SPP that can be reclaimed. This remains at 92% unless you qualify for Small Employers Relief.
RTI Reporting & Late Filing Penalties
From 6 March 2015, all employers may incur a penalty for each tax month in which one or more real-time PAYE reports for a scheme are late.
REPORTING TO HMRC: FPS
Use your payroll software to send a Full Payment Submission (FPS) to tell HMRC Revenue and Customs (HMRC) about payments to your employees and what deductions you’ve made.
Include everyone you pay, even if they get less than £112 a week.
You should send the FPS on or before your employees’ payday
Although HMRC do not usually charge a penalty for the first month in each tax year where you make a late report, this doesn’t apply to late reports for 6 March to 5 April 2015 (tax month 12) for schemes with fewer than 50 employees: it will only apply from 6 April 2015 onwards. These schemes will incur a penalty if they file late, or not at all, for month 12, as this is the only period in the year for which penalties apply to them.
HMRC will issue notices in late May 2015 for penalties incurred:
•Between 6 January and 5 April 2015 by schemes with 50 or more employees
•Between 6 March and 5 April 2015 by schemes with 49 or fewer employees.
Penalties can be between £100.00 and £400.00 per month depending on the number of employees in the scheme.
Late Payment Penalties
HMRC have announced a rate of penalties which will apply to late payments received for 2015/2016, however no penalties will apply if there is a small difference. (Note: The first failure to pay on time does not count as a default).
Number of defaults in a tax year Penalty percentage Amount to which penalty percentages apply
1-3 1% Total amount that is late in the tax year (ignoring the first late payment in that tax year)
From April 2015: the total amount that is late in the relevant tax month (ignoring the first late payment in the tax year)
10 or more 4%
Employees who leave your employment
Please ensure that when an employee leaves that we are informed as soon as possible, as late reporting to HMRC may incur a penalty.
Auto Enrolment Pension Reforms
We have written to you recently regarding the recent communication from the pension regulator requesting a nominated contact, please ensure you have nominated a contact by the deadline specified in your letter. If you require us to do so on your behalf, please let us have your pension regulator letter as soon as possible so we can action this for you.
We will be writing to you in the near future with our Auto Enrolment packages designed to assist you to meet the new Auto Enrolment Pension obligations, which will cover all areas – assessment, communication, calculation and scheme administration, should you decide not to do this process yourself each pay period in house.
Further information on Auto Enrolment can be found at http://www.thepensionsregulator.gov.uk