How will the HMRC changes effect my pay from April 2016?

How will the HMRC changes effect my pay from April 2016?

Tax

In April 2016 the standard tax code for an employee will increase from 1060L to 1100L – this means that each year you can earn £11,000 gross per year before you start to pay tax (an extra £400.00 per year / £33.33 per month / £7.69 per week).

Frequently Asked Questions

Q  My tax code is BR – what does that mean?

A    This means that you are being taxed at 20% on all of your earnings.  If you are a new employee to Bradford Council and you have not supplied a P45, you will need to contact HMRC on 0300 200 3300

       Typical reasons for being on a basic rate (BR) tax code are:

  • Not completing a P45 or P46 – tax code will be changed to 0T
  • Signing statement ‘C’ on form P46
  • Providing a form P45 with a BR tax code
  • Coding notification of BR received by Bradford Council from HMRC on form P6 or P9

Q    My tax circumstances have changed.  What should I do?

A    Contact the tax office directly and advise them about your change in circumstances.  Please do not download a P46 and send it to us directly, because we can only change your tax code when the tax office advise us to.

Q    Why have I had more tax deducted this week/month than last week/month?

A    There could be a number of reasons, including:

  • Has your gross pay increased?
  • Has your tax code changed?  (Note: it is important to advise HMRC when you move so that they can advise you in writing prior to any changes taking effect)
  • Have you returned from a period of unpaid leave?

Q    My tax code is different to my colleague, why?

A    Tax codes are unique to individual circumstances, ie, you may have a second job with another company, be receiving a pension or have under/overpaid tax in a previous year.  All these examples would effect your tax code.

Q    I believe I have overpaid tax.  How can I claim it back?

A    Send your original P60 end of tax year summary to HMRC (they will not accept a copy), or if you are leaving and not continuing your employment, request a P45 and send it to HMRC.  They will then assess your claim.

 

National Insurance

From April 2016 you will pay National Insurance contributions on earnings over £8060 per year.  Most employees will be on NI Category A with a deduction of 12%.

Example A:-  Employee earns £15,000  per year (£1250 per month)

Old – NICAT D @10.6% = £58.66 employee NI deduction

New – NICAT A @ 12% = £69.36 employee NI deduction

Additional costs to:- Employee = £10.70 per month

Example B:-  Employee earns £20,000  per year (£1666.67 per month)

Old – NICAT D @10.6% = £102.83 employee NI deduction

New – NICAT A @ 12% = £119.36 employee NI deduction

Additional costs to:- Employee = £16.53 per month

Example B:-  Employee earns £30,000  per year (£2500 per month)

Old – NICAT D @10.6% = £191.16 employee NI deduction

            New – NICAT A @ 12% = £219.36 employee NI deduction

Additional costs to:- Employee = £28.20 per month

Frequently Asked Questions

Q    I used to be on ‘Contracted Out’ national insurance table letter D what will I be on now?

A    From April employees will no longer receive a rebate on their national insurance contributions for being in a workplace pension scheme.  Most employees will be put on national insurance table letter A.

Q    HMRC state that I am entitled to pay reduced rate NI – How do I start paying the reduced rate?

A    This is only relevant to married woman and widows who opted into the scheme to pay reduced NI prior to May 1977.  Give your ‘certificate of election’ - form CA4139, CF383 or CF380A to your employer if you want to claim your entitlement to pay the reduced rate. If you opted in but don’t have your certificate, you can apply for a new one by sending form CF9 (if you’re married) or form CF9A (if you’re a widow) to HM Revenue and Customs (HMRC).

       There are no changes to the reduced rate deduction of 5.85%, however, you can now earn £8060 per year before paying NI contributions

 

National living wage/Local living wage/National minimum wage

Last Year Bradford Council decided to introduce a local living wage of  £7.85 per hour to all employees (excluding Apprentices and any schools who have not opted into the living wage scheme) from October 2015.

From April 2016, the government has introduced a national living wage of £7.20 an hour for workers aged 25 and older.

The national minimum wage will still apply for workers aged 24 and under, rates for different categories are shown in the table below

National Minimum Wage

 

Category of worker

Hourly rate

Aged 25 and above

£7.20

Aged 21 to 24 inclusive

£6.70

Aged 18 to 20 inclusive

£5.30

Aged under 18 (but above compulsory school leaving age)

£3.87

Apprentices aged under 19

£3.30

Apprentices aged 19 and over, but in the first year of their apprenticeship

£3.30

 

Employee Mileage Allowance Payments

Rate per mile payable for using your own vehicle for business journeys.

 

 

Type of vehicle

Rate per business mile 2016 to 2017

Car

Casual Car User – 45 pence per mile up to 10,000 business miles in the tax year then 25 pence per mile thereafter

Essential Car User – 35 pence per mile up to 8,500 business miles in the tax year then 13.7 pence per mile thereafter

Motorcycle

Up to 124cc engine – 13.4 pence per mile

125cc engine and above – 15.9 pence per mile

Bicycle

14 pence per mile

 

WYPF – West Yorkshire Pension Fund

There is no change to the pension scheme bandings for 2016-17. 

Link to WYPF website:-  WYPF Bandings

 

TPS – Teachers’ Pension Scheme

There is no change to the pension scheme bandings for 2016-17. 

Link to the TPS website:- Teachers' Pension Bandings


Information

Published: 14/04/2016
Audience: All staff paid by Bradford Council Payroll Services
Contact: Mike Stead

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