Getting Ready for the New Year
Without wanting to wish time away, the new tax year is fast approaching. And, as per usual, we have several tasks to perform to make sure that our software remains compliant and supports all the changes introduced by HMRC. Although these changes primarily affect how the payroll is processed ‘under the hood’ by us at Payline it is always a good idea that everyone knows what exactly is going on with their payroll.
NI Letter Changes
Contracting out for defined benefit pension schemes are ceasing as of the new tax year. This means that NI letters such as D, E and L will no longer be in use. Employees currently using these contribution letters will need to migrate across to the corresponding non-contracted out NI letter (see list below). Payline will perform the required routines to ensure this happens as part of the 2015-16 tax year close down. In turn, this means that employers’ contracted out numbers (SCON & ECON) no longer need to be recorded.
D to A – Standard rate
E to B – Reduced rate
L to J – Deferred rate
I to M – Standard rate for employees under 21
K to Z – Deferred rate for employees under 21
N to R – Standard rate for mariners
O to T – Deferred rate for mariners
V to Y – Deferred rate for mariners under 21
New NI Rules for Apprentices
Class 1 NICs for apprentices aged under 25 will cease from April onwards resulting in the introduction of two more NI letters – G and H.
Two Tiers for Student Loan Repayments
The new, second rate for calculating student loan contributions has the potential to introduce both a new contribution rate and pay threshold. However, from the outset, the rate will be consistent with the current rate of 9%. It has been confirmed by HMRC that the P45 layout will not be amended, therefore, it will be required for the employee to confirm which repayment tier applies to them when starting a new job.
Scottish Rate of Income Tax (SRIT)
As from early 2016, HMRC will be introducing Scottish rate of income codes on P9 communications ready for the new tax year. These will be denoted by an ‘S’ prefix and will ensure that our system will calculate the tax correctly for these individuals.
The changes above mean that we’ll certainly remain busy over the coming months!