Employers Class 1 NIC for Apprentices under 25 to be abolished

With effect from 6 April 2016, you may be interested to learn that you may no longer have to pay employer  Class 1 NICs for apprentices under the age of 25.

Currently employer Class 1 NICs are due for all employees aged 21 or over.

 

For the tax year 2016-17 it is proposed that the new NI category H will be used for apprentices who in addition to being under 25 are:

• working towards a Government recognised apprenticeship in the UK which follows a government approved framework/standard

and

• have a written agreement (between employer, apprentice and training provider), giving the government recognised apprentice framework or standard, with a start and expected completion date.

Employers NIC will be at a rate of 0% up to the new Apprentice Upper Secondary Threshold, which will be aligned with the Upper Secondary Threshold for the tax year beginning 6 April 2016.  Earnings above the Apprentice Upper Secondary Threshold (for 2015-16 £3,532 per month) will be at the full rate of 13.8%.

This does not affect the calculation of primary Class 1 NICs deducted from apprentices.

For more information see the HMRC website

Changes to Thresholds and Tax Codes for 2015/16 – are you ready?

From 6th April 2015, the new tax year begins.  This years’ changes are listed below in a quick reference guide:

Headlines

The Personal Allowance has risen to £10,600, and the Basic Rate has reduced to £31,785.

Rate                            %                     Bandwith

Basic Rate                   20%                 £1 to £31,785

Higher Rate                 40%                 £31,786 TO £150,000

Additional Rate            45%                 £150,0001 and above

Changes to Income Tax Allowances

Personal Allowance                                  2014/15           2015/16           Change

Those born after 5 April 1948                       £10,000           £10,600          £600

Born between 6 April 1938 – 5 April 1948    £10,500           £10,600           £100

Those born before 6 April 1938                    £10,660           £10,660           -

National Insurance Contribution thresholds                                                         

                                                                    2014-15           2015/16

                                                                   £ per week   £ per week

Weekly Lower Earnings Limit (LEL)                111                  112

Weekly Primary Threshold (PT)                      153                  155

Weekly Secondary Threshold (ST)                 153                  156

Upper Earnings (UEL)                                    805                  815

Upper Profits Limit (UPL)                          41,865 pa        42,385 pa

Upper Secondary Threshold for U21s (*3)     N/A                  815

Employment Allowance (per employer)          2,000 pa          2,000 pa

*3 Upper Secondary Threshold (UST) introduced from April 2015 for employees under the age of 21.  The rate of secondary NICs for employees under the age of 21 on earnings between ST and UST will be 0%.

Class 1 National Insurance Contribution rates 2015-16

Employees (primary)                                  Employer (Secondary)

Earnings                  NIC rate                      Earnings        NIC rate

£ per week               per cent                     £ per week     per cent

Below £112                 0                                 Below £156     0

£112-155                     0                                Above £156    13.8

£155-815                     12

Above £815                2

Statutory Adoption Pay

                                                          2014-15           2015-16

Earnings Threshold                             111.00             112.00

Standard Rate                                     138.18             139.58

Statutory Maternity Pay

                                                          2014-15           2015-16

Earnings Threshold                             111.00             112.00

Standard Rate                                     138.18             139.58

Statutory Paternity Pay

                                                          2014-15           2015-16

Earnings Threshold                             111.00             112.00

Standard Rate                                     138.18             139.58

Additional statutory paternity pay        138.18             139.58

Statutory Shared Parental Pay

                                                          2014-15           2015-16

Earnings Threshold                             111.00             112.00

Standard Rate                                    138.18             139.58

Statutory Sick Pay

                                                         2014-15           2015-16

Earnings Threshold                             111.00             112.00

Standard Rate                                     87.55              88.45

Employing Under 21 year olds?

Here is some useful information you need to know

Changes to National Insurance Contributions as of 6 April 2015

Some good news! If you employ anyone under the age of 21 years, Employers Class 1 secondary National Insurance Contributions will change to a rate of 0% up to the equivalent of the new ‘Upper Secondary Threshold’.  At the moment the rate is 13.8% so this is a cost saving that may encourage employers to employ more young people.

We recommend that you check that you have the correct date of birth for your employees stored in your payroll software to ensure that the correct NI rates are used from April 2015.

Useful guide on Employing Staff from the HMRC is available here

Children at work – did you know?

If you are employing a child between the ages of 13 until they are considered as legally having left school, you need to notify the Local Authority, which will be the local County Council or equivalent body.

Each authority publishes guidance on employing young people of school age. As an example to find out what the requirements are for businesses located within East Sussex and when they apply please follow this link to East Sussex County Council guidance.

 

 

 

NI allowance from April 2014

From April 2014, every employer will be able to benefit from the new NI allowance. This will be worth upto £2,000 for each employer.

For the tax year 2014/15 employers will be able to reduce their payments to HMRC by the amount of employers NI included within the total amount payable for the month or quarter.

Registration to claim this allowance will be through payroll software as part of regular RTI submissions when the first submission is made to HMRC in 2014/15.

Small employers with an employers NI liability of less than £2,000 in a tax year will have their allowance restricted to the amount of the employers NI liability.