Changes to National Insurance Contributions and the Scottish Rate of Income Tax that will affect you

Changes to National Insurance Contributions and the Scottish Rate of Income Tax that will affect you

Two sets of changes will be applied on a national level to employees' salaries with the effect from 6 April 2016.

One relates to a change in the way National Insurance contributions are applied and the other relates to the introduction of a Scottish Rate of Income Tax.

Changes to National Insurance

The government has announced changes to National Insurance contributions from April 2016.  University staff who are below State Pension Age and are members of a ‘contracted-out’ workplace pension scheme will be affected.  For all other staff, National Insurance contributions will remain unchanged.

What this means for members of USS/UASLAS/STSS/LGPS/NHS

From 6 April 2016, members contributing to any of the contracted out workplace pension schemes listed above will no longer receive the National Insurance contracted out rebate and will pay a higher rate of National Insurance.

Why is this happening?

The change in National Insurance contributions is happening as a result of a change in the State Pension which will also take effect on 6 April 2016.  Currently, the State Pension is made up of two parts: the basic State Pension and the additional State Pension (often referred to as the State Second Pension (S2P) or previously the State Earnings Related Pension Scheme (SERPS)).  Members of the workplace pension schemes listed above are currently contracted-out of the additional State Pension and pay National Insurance at a lower rate.  

For people who reach State Pension Age on or after 6 April 2016, a new State Pension will replace the existing basic and additional State Pension, which will end the practice of contracting-out.  As a result, all staff will pay the same ‘contracted-in’ rate as they build up the new State Pension in addition to their workplace pension.

You can find out more about contracting out at www.gov.uk/yourstatepension

We have also produced a list of FAQs, which you can be found here.

The Scottish Rate of Income Tax

From the 6th April if you live in Scotland you will pay the Scottish Rate of Income Tax (SRIT). The rate will remain the same with the first 10% being assigned to the Scottish Government’s budget.

It is your responsibility to update your details with HMRC by contacting them on 0330 200 3300or byusing the following link https://online.hmrc.gov.uk/shortforms/form/PAYENICoC

To update your address details on your University personal record please email HRESC@abdn.ac.ukPlease note however that this will not update HMRC.

Notes:

Contracted out – In a contracted out pension, you join a defined benefit workplace pension scheme and don't contribute to the additional state pension.

Contracted in – Employees who are contracted in to the State Pension are normally not in a workplace pension and, through their National Insurance contributions, contribute to both the basic and additional state pension.  

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