Software developers: PAYE update 19
Updated 11 January 2016
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1. Budget Statement 18 March 2015
Income Tax changes from 6 April 2016:
- Income Tax changes
- changes in tax coding
- 2016 to 2017 tax year
- 2017 to 2018 tax year
- Class 2 National Insurance contributions (NICs)
- car fuel charge, van and van fuel benefit
Income Tax changes
In his Budget on 18 March 2015, the Chancellor of the Exchequer confirmed the announcements made in his Autumn Statement on 3 December 2014 on Personal Allowances, Income Tax rates and Income Tax bandwidths for 2015 to 2016. The Class 1 NICs earnings limits and thresholds remain unchanged from those confirmed on 3 December 2014.
Details of the PAYE and NICs rates, thresholds and limits can be found in PAYE Update 18 for more information.
2. Changes in tax coding (figures superseded by Autumn Statement on 25/11/15)
There are no additional general uplifts of codes as a result of Budget announcements. Full instructions will be issued to employers on form P7X (2015) Tax codes to use following the Budget.
2016 to 2017 tax year
- changes have been made to the personal allowance which will be increased to £11,000
- the basic rate limit will be increased to £32,000. The higher rate threshold will be £43,000
- there will be one income tax personal allowance regardless of an individual’s date of birth
- the National Insurance upper earnings and upper profits limits will increase to stay in line with the higher rate threshold
2017 to 2018 tax year
- changes have been made to the personal allowance which will be increased to £11,200
- the basic rate limit will be increased to £32,400. The higher rate threshold will be £43,600
3. Car fuel charge, van and van fuel benefit
In his Budget on 18 March 2015, the Chancellor of the Exchequer confirmed the announcements made in his Autumn Statement on 3 December 2014 on car fuel charge, van and van fuel benefit. The fuel benefit multiplier used to calculate the tax payable on the benefit of free fuel for company cars will increase in line with inflation. The van benefit charge and the van fuel benefit charge will also increase in line with inflation. These increases will be based on the Retail Prices Index figure for September 2014. These increases will be legislated by Order in the autumn:
- the current van benefit charge exemption for zero emission vans is being phased out between April 2015 and April 2020
- from the 2015 to 2016 tax year a special low rate of 20% of van benefit charge will apply for zero emission vans
This special rate will then increase each year until by 2020 it becomes the same as the full van benefit charge, as follows:
- 40% of van benefit charge in 2016 to 2017
- 60% of van benefit charge in 2017 to 2018
- 80% of van benefit charge in 2018 to 2019
- 90% of van benefit charge in 2019 to 2020
- 100% of van benefit charge in 2020 to 2021