INCREASED BURDEN FOR EMPLOYERS

The trend of increasing costs for employers is set to continue with recent changes to NIC and the implementation of the living wage.

Changes to NIC payrolls applicable from 6 April 2016 mean it is vital that employers update their payroll records accordingly.  Category D will no longer exist since ‘Contracting Out’ ceased at 5 April 2016.  All employees previously on category D will need to move to Category A and will no longer pay a discounted rate of National Insurance. This will result in a 1.4% increase in the employee NIC rate and 3.4% increase in employer NIC rate for affected employees.

There remains no employer NIC for most employees aged under 21 and there is also now no employer NIC on apprentices aged under 25.

There has also been an extension of employment allowance by £1,000 for eligible employers, meaning the first £3,000 of NIC in 2016/17 does not need to be paid. This allowance can not, however be claimed by companies where there is  only employee who is also a director, domestic employers, payments under the IR35 rules or businesses operating in the public sector.

The living wage was introduced in April 2016 and businesses should ensure that they comply with this in order to avoid penalties. The minimum hourly rate for staff aged 25 and over is now £7.20 per hour, which is a 50p increase compared to the national minimum wage. There are plans to increase this further to at least £9 per hour by 2020.

If you would like additional information on any of the above, or wish to discuss the implications in more detail please contact your local Lentells office.