Statutory changes for 2015
The changes required for completing the 2014/2015 payroll year-end and to start processing in the 2015/2016 tax year are as follows:
Additional Statutory Paternity Leave and Pay will be replaced by Shared Parental Leave and Pay
For parents of babies born on or after 5 April 2015, Additional Statutory Paternity Leave and Pay (ASPP) will be replaced with Shared Parental Leave and Pay (SPL/ShPP). SPL/ShPP allows eligible partners to share parental leave. Under SPL/ShPP:
• Parents can agree to convert a period of maternity leave into shared parental leave. The available shared parental leave is 52 weeks minus the weeks of maternity leave already taken
• The available shared parental pay is 39 weeks minus the weeks of maternity pay already taken
• At least a week must be taken at a time and all leave must be taken before the child’s first birthday
• Parents can choose to be on leave at the same time
• Ordinary Paternity Leave (OPL) is not affected. Fathers can still take up to two weeks OPL and then take SPL/ShPP if required
The rules for adoptions are similar to new births.
Statutory Adoption Pay will be paid at 90% of average weekly earnings for the first six weeks
Where the adoption pay period (APP) starts before 5 April 2015, SAP is paid for the entire 39 weeks at either the standard weekly rate or 90% of average weekly earnings if that’s less. From 5 April 2015 the first 6 weeks will always be paid at 90% of the average weekly earnings. The new entitlement mirrors the current arrangements for Statutory Maternity Pay (SMP). For the remaining 33 weeks the SAP rate will be calculated as before. SAP will also apply to surrogacies for the first time.
New NI category letters M, Z, I and K for people aged under 21
New NI category letters are being introduced to identify employees who are under 21.
Employer NI contributions for employees under 21 are being reduced to a 0% rate up to a new NI threshold called the ‘Upper Secondary Threshold’ (UST). For the 2015/2016 tax year the UST will be aligned with the Upper Earnings Limit (UEL). Employers will still pay 13.8% on any earnings above the UST.
New M and N tax code suffixes for employees who transfer a portion of a tax allowance to their partner, or receive a portion of a tax allowance
From 6 April 2015, anyone who is not liable to income tax above the basic rate will be able to transfer up to £1,060 of their personal allowance to their spouse or civil partner if the recipient is also not liable to income tax above the basic rate. The new tax code suffixes are M and N.
• The M code will identify a person who is receiving the transferred allowance
• The N code will identify a person who is transferring some of their allowance
The new N and M suffix codes will start to be issued by HMRC from April 2015.
Tax deductions will be restricted to 50% of taxable pay for all tax code types
Prior to the 2015/2016 tax year only the ‘K’ tax code restricted the amount of tax that could be deducted to 50% of taxable pay. Under the new rules, the tax deducted in a single pay period will be limited to 50% of Gross taxable earnings for all tax codes.
PAYE, NI and Statutory Payments
The rates, bandwidths and thresholds for PAYE, NI and Statutory Payments will be updated for the 2015/2016 tax year as set out in the Autumn Statement.
Changes in Tax Codes
There will be a general uplift of tax codes with the suffix ‘L’. These suffix codes increase by 60; code 1000L becomes 1060L. The emergency tax code with effect from 6 April 2015 is 1060L.
Student Loan Threshold
The annual student loan threshold will increase to £17,335.
Auto Enrolment Threshold
The auto enrolment thresholds will be updated for the 2015/2016 tax year.
Full Payment Submission (FPS)
The Taxation of Pensions Bill published in October 2014 makes it possible for people aged 55 and over to withdraw either some or all of their pension funds (“flexible drawdown”). The FPS will include an indicator to inform HMRC that this has occurred.
The FPS will also include the address of an employee. HMRC records will then be updated if the address has changed. This address is also included in NINO Verification Requests.
Employer Payment Summary (EPS)
A new field will be introduced into the EPS to include the tax month that recovery and compensation amounts should be allocated against by HMRC. Previously HMRC used the submission date of the EPS to decide the tax month to allocate recovery and compensation.
HMRC has extended the maximum permitted period of inactivity from 6 to 12 months. This extension is included in the EPS