Key changes for the new 2017/18 Tax Year
The new tax year is coming up very soon, so today I wanted to highlight the changes that employers need to know about which will apply from 6th April 2017.
We’ll start with an easy one: the Personal Tax Allowance is increasing from £11,000 to £11,500 a year, so if you’re a director paying yourself just under the tax threshold then you can increase your pay to £958 a month from April. If you pay yourself just under the National Insurance threshold then your pay can increase up to £680 per month.
The Apprenticeship Levy starts this year. This levy is being introduced to help young people get into apprenticeship schemes. The new levy will only apply to companies that have a wage bill of over £3 million per annum, and the levy will be based upon 0.5% of your wage bill, although there will be an allowance of £15,000 for all employers, which means the levy will actually be 0.5% of your wage bill less £15,000.
New gender pay gap regulations are coming into force, and companies employing more than 250 people must publish the details of their gender pay gap by April 2018 using data from the 2016/17 tax year. The report will need to include median and mean information relating to employee pay and bonus pay, together with details of the number of men and women in each quartile of the organisation’s pay distribution. I’m sure the results will make interesting reading!
Benefits in Kind can now be payrolled, including company cars, so instead of completing individual P11Ds for each benefit in kind, they can be put through the payroll instead and taxed accordingly each month. A P11d(b) form must still be submitted to HMRC though – this will report the total Class 1A NI contributions due on benefits in kind. If you want to start payrolling your benefits in kind then you must declare this online to HMRC before 6th April and provide the relevant information to your payroll administrator, otherwise you’ll need to wait until next year.
From April 2018 it will be compulsory to put Benefits in Kind through the payroll, and you must apply to HMRC to do this before 6th April 2018, so it’s probably worth starting a year early and getting used to the process before next year.
The National Living Wage for those aged 25 and over is increasing to £7.50 per hour, and the National Minimum Wage will increase from April 2017 as follows:
£6.95 to £7.05 per hour for those aged 21-24
£5.55 to £5.60 per hour for those aged 18-20
£4.00 to £4.05 per hour for those aged 16-17
£3.40 to £3.50 per hour for apprentices aged under 19, or over 19 but in their first year of apprenticeship. Apprentices in their 2nd or 3rd year must be paid at the rate applicable for their age.
If any of your employees are on, or close to, the current minimum wage, you’ll need to increase their hourly rate from 1 April 2017. If April’s payroll run includes hours worked in both March and April then you’ll need to record hours worked at each rate.
Statutory payments are also increasing this year. Statutory Sick Pay is increasing to £89.35 per week and Statutory Maternity Pay is going up to £140.98 per week.
If we’re already running your payroll then we will already have been in touch with you about these changes because we’re proactive in ensuring that our clients pay the right wages to their staff, so you don’t have to worry.