National Insurance

This coming tax year the National Insurance threshold is remaining at £8,112 (£156 per week) before employee or employer NIC is deducted. But the employment allowance is going up to £3,000 covering employer’s NIC to that level. You can claim Employment Allowance as a company if you are paying class 1 national insurance. However from April 2016 if you don’t have any employee’s on the payroll, i.e. the Director is the only employee, you are no longer entitled to Employment Allowance, as announced in last week’s Budget.

Tax Code

For 2016 to 2017 the basic Personal Allowance will be £11,000 and the basic rate limit will be £32,000. The new threshold (starting point) for PAYE is £212 per week (£917 per month).

The 2016/17 standard tax code if 1100L – the 1100 refers to the £11,000 tax free income. The ‘L’ shows that you are entitled to the standard tax free personal allowance.

You can find out more about the different tax codes and what they mean on Gov.UK here

Increase in costs for Sole Director Companies

The Chancellor’s budget announcement that Employment Allowance is increasing to £3,000 for the new tax year comes with a sting in the tail for companies whose sole employee is a director. From the start of the new tax year 6th April 2016 these companies will no longer be eligible to claim Employment Allowance.