How will the new PAYE rates for 2016-17 affect your business?

If you have employees you will want to know how much you can pay your employees in 2016-17 before you have to pay employer National Insurance Contributions and if there are any further benefits which will help you as an employer.

There is no change from 2015-16 and employers will continue to pay employers National Insurance Contributions on earnings above £156 per week, whilst employees will pay contributions on earnings above £155 per week. The rate of contributions remains at 12% for employees and 13.8% for employers.

From 6th April 2016 employers will not pay employer's National Insurance contributions for apprentices aged under 25.

Employers will continue to benefit from not paying employers NI for employees under 21 which came into force from 6th April 2015.

The employment allowance increases from £2,000 to £3,000 from 6th April and is used against employer NI contributions each pay period until it is used up.  Employment allowance must be applied for through your payroll software.  The employment allowance will not be available to employers where the only employee is the director of the company.

Tax free earnings will increase to £11,000 per annum.  The standard tax code will become 1100L.  Basic rate tax of 20% will be due on earnings up to £32,000 after the personal allowance has been deducted with 40% tax due on earnings between £32,001 and £150,000.