It’s getting to that time of year again, where we reach the end of another tax year and the start of another. HMRC have just issued their advice document P9X_2016 informing us of the tax codes to use next year.
For 2016 to 2017 the basic Personal Allowance will be £11000 and the basic rate limit will be £32000. This means you can earn up to £212 per week or £917 per month before you start paying tax.
Emergency Tax Code
The new Emergency Tax Code will be 1100L (previously 1060L in 2015/2016) for all employees, reflecting the £11000 in tax free earnings.
Income Tax Rates and Bandwidths
UK Rate – % – Bandwidth
Basic Rate – 20% – £1 to £32,000
Higher Rate – 40% – £32,001 to £150,000
Additional Rate – 45% – £150,001 and above
What do you need to do before 6 April 2016 ?
You may be sent a P9(T) form if your employee has a new tax code either in paper format, or via an online notice of coding.
For those employees who you do not receive a notification about then you can add 40 to any tax code ending in L, Add 44 to any tax code ending in M, or add 36 to any tax code ending in N. You also remove any week 1 / month 1 markings used in the 2015/2016 tax year. If you receive a 2015 to 2016 tax code on a form P6 too late to use in the 2015 to 2016 tax year then you can carry forward this tax code instead. If your employee has an Authorised tax code of BR, D0, D1 or NT then you continue to use this tax code.
If you need help moving your payroll year over the year end and making changes then you can book a 1-to 1 hand holding session with Alison here at Silicon Bullet so you have every confidence that you start your new tax year using the correct codes for your staff. We also supply and support Sage Instant and Sage 50 Payroll, and can assist if you use the Basic HMRC Payroll tools too.
To read the full notice which was used as the source for this post then you can take a look at the P9X_2016 link from the HMRC.