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NI Letter changes 2016/2017

Written by  Saturday, 19 March 2016

Employers will be pleased to hear that after last years’ National Insurance letter changes that saw the addition of 4 new categories to bring the total to 11, the 2016-2017 tax year sees the amount of categories being reduced once more to 7. This means less to remember, less confusion and less room for error!

There has been a new National Insurance category introduced for Apprentices under the age of 25, this new H code will mean that neither the employee nor the employer will have to pay National Insurance contributions for qualifying Apprentices.

But it is not all good news, the abolishment of National Insurance contracted out rates means that there will no longer be the option to reduce your National Insurance contributions by opting out of the State Second Pension in favour of putting extra into your personal pension scheme.

The State Second Pension has ended, along with the basic State Pension to be replaced by a single-tier State Pension scheme with no opt out policy. This means National Insurance categories D, E, I, K and L are no longer needed.

To recap on all that has happened to the National Insurance categories over the last 2 years, the below tables lay out the changes since tax year 2014-2015.

 

2014-2015

Table   Letter Meaning
A Standard National Insurance category paying basic rate NI
B Married women & widows entitled to pay reduced rate NI
C Employees over State Pension age
D Employees in a contracted-out workplace pension scheme
E Married women & widows in a contracted-out scheme
J Employees exempt from NI as they are paying it in another job
L Employees exempt from NI as they are paying it in another job and are   in a contracted-out workplace pension scheme

 

2015-2016

Table   Letter Meaning
A Standard National Insurance category paying basic rate NI
B Married women & widows entitled to pay reduced rate NI
C Employees over State Pension age
D Employees in a contracted-out workplace pension scheme
E Married women & widows in a contracted-out scheme
I Employees under 21 in a contracted-out scheme
J Employees exempt from NI as they are paying it in another job
K Employees exempt from NI as they are paying it in another job, are   under 21 and are in a contracted-out workplace pension scheme
L Employees exempt from NI as they are paying it in another job and are   in a contracted-out workplace pension scheme
M Employees under 21
Z Employees exempt from NI as they are paying it in another job and are   under 21

 

2016-2017

Table   Letter Meaning
A Standard National Insurance category paying basic rate NI
B Married women & widows entitled to pay reduced rate NI
C Employees over State Pension age
H Apprentices under 25
J Employees exempt from NI as they are paying it in another job
M Employees under 21
Z Employees exempt from NI as they are paying it in another job and are   under 21

 

As you can see, 2016-2017 sees the introduction of much simpler rules surrounding National Insurance so it should make things easier for everyone concerned, but if you do have any questions about National Insurance, please contact one of our team on 0333 11 23456.

Carly Boyd

Carly started her career with Dataplan back in 2013 as a temporary admin assistant. Coming from a background in Graphic Design, she fell in love with payroll and worked her way up to Project Manager just 2 years later. Carly is currently involved in the massive undertaking that is setting up Auto Enrolment pensions, and continues to show her commitment to payroll by studying for her Payroll Management degree.

Dataplan Payroll Limited t/as Dataplan Charity, 1 Prince Albert Gardens, GRIMSBY, DN31 3AG.
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