HMRC changes from April 2016

There are a number of changes which are due to take place in April 2016 from commencement of the new Tax Year which will affect both you as an employer and your employees.


Changes to National Insurance:

From 6th April 2016, the single-tier pension will replace contracting out for defined benefit salary-related pension schemes.

This means those employees who were contracted-out of the state second pension scheme along with their employer, pay the standard rate of NIC instead of the lower contracted-out rate.

Contracted-out NIC table letters D, E, I, K, L, N, O and V are replaced by standard rate NIC table letters A, B, J, M, P, Q, R, T, Y and Z, which will be carried out automatically by Strictly Education for our clients.


Student Loan repayment changes:

From 6th April 2016, there will be two types of student loan deduction:

Plan 1 – Student loan taken out before 1st September 2012, based upon the current earnings threshold of £17,335

Plan 2 – Student loan taken out during or after 1st September 2012, based upon the new earnings threshold of £21,000 for 2016/2017. This threshold will be fixed until 2020/2021.

The new starter checklist will prompt employers to ask employees about their student loan plan type. This takes precedence over form P45, which will indicate only whether an employee is already repaying a student loan.


Increase to Employment Allowance:

From 6th April 2016, the Employment Allowance will increase from £2,000 to £3,000 and companies whose Director is the sole employee will no longer be able to claim it.

An organisation that has claimed the Employment Allowance can continue to do so in each tax year until the allowance is fully used up or the end of the tax year is reached, whichever is sooner.

Full details of the changes to be implemented can be found on the HMRC government website, so please take the time to review and understand the changes and how they will impact you and your employee’s.