As a new tax year kicks off, make it your new (tax) year’s resolution to get your payroll system on top form. Further, it is important that you are are up to date with the changes in employer payroll taxes.
Not only are there important changes to payroll, there are optional allowances and provisions that could well benefit your business and employees.
The most basic change is the increase of the standard personal allowance to £10,600 as from 6th April 2015. Most of your staff will probably be on the tax code 1060L.
If the Revenue have sent different tax codes for some or all of your employees, it is important that you use them, as employees may have other income or tax deductible expenses that are being taxed via their tax code.
Your employee may thank you if you suggest they check the accuracy of their tax code: the Revenue can include estimates in the tax code based on previous years’ income or expenses, which means mistakes are likely to arise.
New in 2015/16, £1,060 of the personal allowance can be transferred to a spouse or civil partner, but not to common-law partners. This has two important conditions: the donor must have total income worth less than £10,600 and the recipient needs to be a basic rate taxpayer.
If you or your employees would like to be informed by the Revenue how and when to transfer your personal allowance, you can register your interest at the following link:-
You may have seen adverts on television for auto-enrolment of pension schemes. This requirement applies to all businesses with employees, whether you have one or a hundred employees.
The larger businesses are being enrolled first. After April 2015, smaller businesses (those with fewer than 50 employees) are being brought into the system. You should have received a letter from the Revenue stating your “staging date” (when you need to start running a pension scheme).
It can take several months to get a pension system up and running and there are considerable financial penalties for not complying with auto-enrolment, so it is vital you prepare in advance for this. An up-coming blog will look at auto-enrolment in more detail.
Following the controversial introduction of “real time reporting” by the Revenue, those operating small payroll systems (fewer than 10 employees) have been able to take advantage of a concession not requiring the reports to be filed at the same time payments are being made.
This concession only runs until the end of March 2016, by which time all employers will be expected to report in real time. It is therefore worth adapting your systems during 2015/16 to meet the requirements next year, so they don’t come as a shock.
Directors and employees can now be paid up to £155 a week without paying any National Insurance.
In a move to encourage the employment of under 21s, employers don’t need to pay employer’s national insurance on under 21s up to an “upper secondary threshold” (UST) which is £815 per week for the 2015/16 tax year. For earnings above the UST, the excess still attracts employer’s national insurance. If you employ under 21s, note the new National Insurance categories you should use:-
Use For ….
|Under 21s not in a contracted-out pension scheme|
|Under 21s not in a contracted-out pension scheme and deferring NI contributions|
|Under 21s in a contracted-out pension scheme|
|Under 21s in a contracted-out pension scheme and deferring NI contributions|
Additionally, most organisations are still able to get a £2,000 deduction off their employer’s National Insurance bill. This allowance is expected to end after March 2016, so make sure you claim it while you still can.