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Payroll Tax Year 2016-17: Additional Information

Upgrade to 2016 R6 for Payroll year end 2015-16
 
Important:
 
  • Please do not submit your final submission for payroll year 2015/16 with a version/release lower than QuickBooks 2016 R6.
  • Please also note that HMRC passwords to need to be entered in lower case in order to file RTI submissions successfully in QuickBooks 2016 R6. E.g. 'PASSWORD' needs to be entered as 'password'. Please our article for further information this authentication process.
 
At tax year 2014/2015 the final submission to HMRC reversed the employment allowance information sent to HMRC from ‘YES – claiming/claimed’ to ‘NO - not claiming/claimed’. The reversing of the employment allowance has been fixed in the QuickBooks 2016 R6 the estimated release of which is 17 March 2016. 
 
Note: all releases of QuickBooks 2015 and 2016 currently carry the reversing of the employment allowance when a final submission is made. Its advised payroll users should upgrade to QuickBooks 2016 and ensure auto update is turned on ready to auto install release 6 before proceeding with payroll year end 2015’16.
 
Ensure you are on the correct version 
 
To check your version, open QuickBooks and press the F2 button on your keyboard.  The Product Information screen will appear, your release number will be shown at the end of the top line.
 
TIP: QuickBooks 2016 R6 also ensures the declaration questions do not need to be answered this year as they have been removed from R6. Finally always take a back-up of your data before updating your software.   
 
 
 
 
 
Payroll Guidance 2016-17
 
There has been no change to tax rates or statutory payment rates but full details of rates, thresholds, uplifts and changes can be found at www.gov.uk
 
Please find below a summary of 2016-17 changes that maybe relevant to you as a QuickBooks for desktop payroll user.
 
 
Rates and thresholds for employers 2016 to 2017
 
  • There is an uplift to tax codes with the suffix ‘L’, ‘M’ and ‘N’. 
  • L suffix codes increase by 40 (e.g. 1060L become 1100L)
  • M suffix codes increase by 44
  • N suffix codes increase by 36
  • Note: there is no ‘global uplift’ feature in QuickBooks for desktop, employee tax codes must be changed individually on each employee record.
 
 
Employment Allowance
 
  • The allowance has increased from £2000 to £3000 per annum and the process remains the same in QuickBooks for desktop
  • Limited Companies with a single director and no other employees no longer qualify for the employment allowance
 
 
Collection of student loans
 
The Government introduced a second Student Loan plan which was applied to loans taken out by students in England & Wales from 1 September 2012 or later. From 6 April 2016 a new threshold will be introduced for a new type of student loan deduction named Plan Type 2. This new Plan Type 2 threshold is in addition to the existing threshold which will be named Plan Type 1.
 
In QuickBooks we have created two new payroll items for plans 1 & 2. You can select your plan type for those paying student loan payments from with the employee record:
 
  • Select employee
  • Choose the Payroll Info tab
  • Select Tax & NI Details
  • Check the Subject to Collection of Student Loans tick box
  • Select Plan 1 or Plan 2 from the drop down options
 
Note: P60, P32 and P11 reports will show a summary of student loan payments and not separate amounts for plans 1 & 2. In comparison QuickBooks payroll reports that report by payroll item will display what has been paid across each plan, e.g. Payroll Summary report. Finally the old student loan payroll item will be removed/made inactive in QuickBooks later during payroll year 2016-17 via a scheduled release, this will not affect historical reporting.
 
Employers will only ever be asked to operate either Plan Type 1 or Plan Type 2 deductions at one time. The pay period values for the new threshold and the deduction itself are calculated as shown below for both plan types. The value PxRs (the rate of student loan recovery) is also the same for both plan types. The form SL1 (Student Loan Start Notice) issued by HMRC to employers will show which plan type to operate.
 
 
 
Auto Enrolment
 
  • No changes to the Auto Enrolment trigger(s) or the LEL
  • UEL increased to £827 per week from £815
 
 
Scottish Rates of Income Tax
 
  • The Scottish rate of Income Tax (SRIT), now renamed Tax Regime comes into effect
  • SRIT or Tax Regime will continue to be administered by HMRC
  • A Scottish taxpayer will be identified by having an 'S' prefix
  • Scottish Parliament has kept their variable amount the same as the rest of the UK for 2016-17
 You can enable an employee for the Scottish Tax Regime from with the employee record:
  • Select employee
  • Choose the Payroll Info tab
  • Select Tax & NI Details
  • Check the Tax Regime tick box
  • Select OK
 
 
NIC for Apprentices Under 25
 
If you employ an apprentice under the age of 25, you may no longer have to pay employer Class 1 National Insurance contributions on their earnings up to the new Apprentice Upper Secondary Threshold.
  • From 6 April 2016, if you employ an apprentice you may not need to pay employer Class 1 National Insurance contributions (NICs) on their earnings below £827 a week (£43,000 a year).
  • They must be under 25 years old and following an approved UK government statutory apprenticeship framework (frameworks can differ depending on the UK country).
More information and frameworks available at HMRC under Employer National Insurance contributions for apprentices under 25. 
 
 
 
Contracting-out of the additional State Pension Ends
 
From 6 April 2016, when the new State Pension is introduced, contracting-out of the additional State Pension will end. Please observe the following changes and considerations.
  • The removal of the Upper Accrual Point
  • There is no longer the need to report NI earnings between the Primary Threshold (PT) and Upper Accrual Point (UAP) & UAP to Upper Earnings Limit (UEL).
  • From April 2016, you and your employees will pay the standard rate (class 1) of NICs instead of the contracted-out rate. The current employer standard rate is 13.8% of all earnings above the secondary threshold for all employees, you will no longer get the 3.4% National Insurance rebate nor will employees receive the employee 1.4% rebate.
  • NI contracted out letters (categories D, E, K, I, L, N, O and V) will be replaced by Standard National Insurance (categories A, B, J, M, P, Q, R, T, Y and Z).
  • Make sure your SCON (Scheme Contracted-Out Number) is correct when completing your Full Payment Submission (FPS) through the Real Time Information (RTI) system. This will ensure that your scheme can be identified correctly when HMRC run the “closure scan” after 6 April 2016 to close all open periods of contracted-out employment on your employees’ National Insurance accounts.
  • SCON & ECON has now been removed from the Full Payment Submission since they are no longer applicable.
Further guidance is available at HMRC under New State Pension: information for employers
 
 
 
Direct Earnings Attachment (DEA) Higher Rate
 
There has been an amendment to the maximum rate that can be deducted hen there has been an act of fraud. The current maximum of 20% will increase to 40% for those where the higher rate is applicable. DEA documentation will state what rate should be applied.
 



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