Our first in this series of blogs focused on the personal tax changes coming in April 2016, now it’s the turn of employment tax.
The Government seem to have decided that the National Minimum Wage (NMW) isn’t quite high enough to live off, so from 1 April 2016 there will be a National Living Wage (NLW). The NLW will work as a premium on top of the NMW and only be applicable to those over 25. From 1 April 2016 the NLW will be a total of £7.20 per hour (50p more than the current NMW).
To sweeten the above announcement, there is a present from the Chancellor…. You’re probably aware of the Employer Allowance which can be used against Employer’s National Insurance contributions. This has been set at £2,000 a year since April 2014, but from 6 April 2016 will be increased to £3,000 per year – your payroll software should increase the allowance automatically. From 6 April 2016, companies where the Director is the sole employee will not be eligible for the allowance.
Tax planning tip: If you have not already claimed the £2,000 employment allowance for 2015/16, it’s not too late – do it on your next payroll run!
Additionally, there will be a break from Employer’s NIC for businesses employing apprentices under the age of 25, on earnings up to the NI upper secondary threshold (£43,000). To qualify, an apprentice needs to be working towards a government recognised apprenticeship and have a written agreement with a start and expected completion date.
Tax planning tip: Get the details right when taking on a new apprentice – if it fits with your business, structure the apprenticeship in such a way that the business will be eligible for the NIC break.
Since the introduction of Real Time Information (RTI) in April 2016, HMRC have been fairly relaxed on the “on or before” reporting requirement, when it comes to micro-employers with weekly, or more frequent payments to employees. Well, the honeymoon period is over (alas, it was too good to last) and from 6 April 2016, they will align the treatment of micro-employers with that of all other employers. As you might expect, HMRC can charge penalties for late RTI submissions and interest on late payments. If meeting your RTI obligations is a challenge, our payroll department may be the answer! Contact us with any queries.
Coming soon…. Property tax
Katie Kettle, Technical Manager