Payroll Changes for the April 2016 Tax Year
There are several payroll changes for the April 2016 tax year that employers need to prepare for. If you have workers on the minimum wage possibly the largest impact will be with the new National Living Wage.
The National Living Wage
The National Living wage is to come into force this April. This should not be confused with the “Living Wage” as published by the living wage foundation, see here for further details. Employees that are 25 years of age or older, and not in an official apprenticeship scheme, will be entitled to a minimum of £7.20 per hour from April 2016.
Employees under the age of 25 are still entitled to at least the National Minimum Wage.
Guide to current 2015 Minimum Wage rates:
| 21 and over | £6.70 |
| 18 – 20 | £5.30 |
| Under 18 | £3.87 |
| Apprentice (aged 16 – 18, or the first year if 19 or over) |
£3.30 |
The rates are usually updated every October. For further details about the new National Living Wage see here or general minimum wage rates see here.
Beware if you have a salary sacrifice / exchange pension scheme. The salary remaining after the pension exchange must still exceed the minimum wage rates.
Apprentice National Insurance Changes
From April 2016 there are changes to employer’s National Insurance Contributions for apprentices below the age of 25.
There will be no employer Class 1 National Insurance Contributions to pay on earning below the Apprentice Upper Secondary Threshold, which will be £43 000pa from April 2016.
Not all apprentice schemes will be eligible: the scheme must follow an approved UK government apprenticeship framework.
If the conditions are met then a new NI category H will be applied in most cases, and this is a development of the current positions for employees below the age of 21. For foreign going mariners there will be NI category G.
The employee however, will continue to make National Insurance Contributions in the usual way.
For further guidance see here.
