HMRC Compliance changes

[For AccountEdge Plus and AccountEdge Network Edition users only]

Payroll Year 2015/2016

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Abolition of Employer National Insurance Contributions for Under 21s

From April 2015 most employer NI Contributions are being abolished for employee aged under 21. HMRC have introduced new NI Table Letters which will be used fwhen calculating NI employee and NI employer contributions for these employees. Four new categories have been created for the NI Table Letters:

I - Under 21 standard contracted - out

K - Under 21 deferred contracted-out

M - Under 21 standard not contracted - out

Z - Under 21 deferred not contracted - out

The categories listed above can only be applied to employees between the ages of 16 and 21 years.

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Statutory Shared Parental Pay, Additional Statutory Paternity Pay and Ordinary Statutory Paternity Pay.

From April 2015 Statutory Shared Parental Pay is replacing Additional Statutory Paternity Pay and Ordinary Statutory Paternity Pay is being renamed Statutory Paternity Pay. For the new payroll year, the ShPP (Statutory Shared Parental Pay) Wage and the ShPP Employer Expense category will be created and the Statutory Paternity Pay Wage category will be renamed Statutory Paternity Pay and the OSPP Recovery employer expense will be renamed SPP Recovery.

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'Transferable tax allowance for married couples'

Two new PAYE tax code suffixes, M and N have been added to the Tax Code field and can be used for payroll 2016 and later. These new PAYE tax code suffixes, M and N will be used by HMRC when operating the 'Transferable tax allowance for married couples'. This is a new tax allowance being introduced from April 2015. HMRC will issue tax codes with these suffixes for qualifying employees.

Payroll Year 2016/2017

[For AccountEdge Plus and Network Edition users only]

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Student Loan Deduction changes

From April 2016 there will be 2 thresholds for Student Loan Deductions. Your software can calculate the deduction amount on the paycheques but will need to have the Plan Type used by the employee selected.

In the employee’s card payroll information deductions window, if the payroll year is 2017 the option to select the Student Loan Deduction Plan Type 1 or 2 will become available.

If the payroll year is 2016 there is only one threshold rate used to calculate the deduction.

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Scottish Rate of Income Tax

From April 2017 the Scottish Government can vary the rate of Income Tax (PAYE). This rate is determined by the employees tax code. If the first letter of an employees tax is “S” then the Scottish rate (SRIT) should be used. For 2017 the Scottish rate will be the same as the rest of UK.

When processing payroll for the payroll year 2017 and later, if the employees tax code is prefixed by ‘S’, the Scottish Income Tax rates will be used for tax calculations.

The 2017 tax rates have not changed with the exception of the UEL (Upper Earning Level) threshold being increased and the UAP (Upper Accrual Point) being removed.

RTI - Full Payment Submission (FPS) file will NOT show the ‘S’ prefix.

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NIC Category (Letter) changes - End of Contracting Out

From April 2016 pension schemes will no longer use a contracted-out salary related (COSR) occupational pension scheme to contract out of the State Scheme.

If the payroll year is 2017 then only the following NI letters are valid:

A Standard Rate

B Reduced Rate

C (Pensioners) Rate

H Apprentice Rate (Under 25)

J Deferred Rate

M Standard Rate (Under 21)

Z Deferred Standard Rate (Under 21)

X No contributions due

ECON and SCON fields are only required when Contracted-Out NI contributions are used.

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Apprentice NIC category

New Apprentice NI category - NI Table Letter ‘H’.

From 6 April 2016 a zero rate of Class 1 Secondary contributions has been introduced for apprentices under the age of 25.

To use this category the employee must be apprentices and under the age of 25.

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Flexible Pension Drawdown payments

From payroll year 2017 HMRC requires some pension payments, ‘Flexible Pension Drawdown’ payments and ‘Pension Death Benefit’ payments to be reported in the FPS submission. The Flexible Pension Drawdown, Pension Death Benefit and Trivial Commutation Payment are mutually exclusive. They are not displayed if the payroll year is 2016 or earlier.

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ECON removed from Full Payment Submission

As part of the Contracting-Out changes the ECON field has been removed from the submission for payroll year 2017 onwards.

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Employer Allowance

For the 2016 to 2017 payroll tax year the Employer Allowance has been increased from £2000.00 to £3000.00