Payroll legislative changes 2015/16

New Employer NI rates for under 21’s
Employers will not be required, for employees under the age of 21, to pay Class 1 Secondary National Insurance Contributions on earnings up to a new Upper Secondary Threshold (UST). Class 1 Secondary NICs will continue to be payable on all earnings above the UST.

For tax year 2015-16:
The value of the UST and the Upper Earnings Limit (UEL) will be the same
UEL is £815 per week
UST is not reported to HMRC on RTI returns

4 new NI category letters specifically for under 21’s:
Current     New
A                M        Not contracted out standard rate contributions
J                 Z          Not contracted out deferred rate contributions
D                I          Contracted out Salary Related standard rate
L                K          Contracted out Salary Related deferred rate contributions

Employers will start NI contributions, for under 21’s, when weekly pay is greater that the prevailing UEL (£815).

Liberty Accounts has added a new check to ensure the date of birth for employees subject to age related NI exemptions has been verified. Where the date of birth has been confirmed the NI table will be automatically modified as appropriate for the Under 21 threshold, and for the retirement age threshold.

Real Time Information (RTI)

Full Payment Summary (FPS)
The pension Scheme Contracted Out Number (SCON) is now mandatory when sending an FPS for any employees on NI Rate D, E, I, K or L. You can no longer populate SCON field with an incorrect or missing SCON.

Employers’ Contracting Out Number (ECON) is now mandatory when sending an FPS for any employees on NI Rate D, E, I, K or L.

Declarations, when making a final FPS submission, are no longer required by HMRC.

Employer Payment Summary (EPS)
HMRC will now only accepts an EPS with the Tax Month number set to be sent in a specific date range. For example, if you are including Tax Month 1 in the EPS, you can only submit the EPS between 06/03/2015 and 19/05/2015 inclusive. Other changes to the EPS include:

Declarations, when making a final EPS submission, are no longer required by HMRC.

Where a tax credit is due the PAYE month should be specified.

OSPP and ASPP labels have been changed to SPP and ShPP

Period of Inactivity reporting has been increased to up to 12 months

Other changes

Employees ability to transfer tax allowance
This allows a spouse or civil partner who is not liable to income tax above the basic rate to transfer £1,050 of their personal allowance to their spouse/civil partner, provided that the recipient of the transfer is not liable to income tax above the basic rate. HMRC have introduced 2 new tax code suffix letters to cater for the transfer. Employees who might benefit from transferring their tax allowance will be asked to register their interest. Then, from April 2015, HMRC plans to approach those registered employees and invite them to apply.

Tax limited to 50% of all earnings
Designed to prevent negative net pay situations after a change in tax code, tax deducted in a single pay period will be limited to 50% of Gross Taxable Pay for all tax codes with any additional tax due taken in future pay periods.

Student Loan
Student Loan Threshold has increased to £17,335

Statutory Payment Changes
New Statutory Adoption Pay rules apply.

Shared Parental Pay (ShPP) and Leave
ShPP is a new statutory entitlement replacing Additional Statutory Paternity Pay (ASPP).

Ordinary Statutory Paternity Pay (OSPP)
OSPP is renamed to SP, entitlement remains unchanged.

Additional Statutory Paternity Pay (ASPP)
ASSP and Leave will be abolished, however it will still be in use in 2015/16 for babies due before 5 April 2015.

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