From 6th April 2016 contracting out of the additional State Pension on a defined benefit basis will cease. Employees will no longer be able to use a contracted-out salary related occupational scheme to contract out of the State Scheme and will be automatically put back into the State pension scheme. The rebate of 1.4% for employers and 3.4% for employees will also end at 5th April 2016.
With the new State Pension being introduced there will a few changes in what and how you report to HMRC:
• Employers will no longer have to report on the Full Payment Submissions to HMRC the Employers Contracting-out Number (ECON) and the Scheme Contracted-out Number (SCON)
• A requirement to report National Insurance earnings between Primary Threshold (PT) and Upper Earnings Limit (UEL), as was required prior to 2009
• It is not necessary to report the information of seperating the National Insurance (NI) earnings between the Primary Threshold (PT) and Upper Accruals Point (UAP) and UAP to Upper Earnings Limit (UEL).
• From the start of the new tax year employers will be no longer be allowed to use your Contracted-out Salary Related (COSR) occupational pension scheme to contract out employees out of the new State Pension scheme.
• The form P60 will change as there will be one less column to complete on the form.
HMRC systems will be all updated to reflect these changes from 6th April 2016 onwards and the UAP field will be removed from the Full Payment Submission (FPS) and Earlier Year Update (EYU).
Regarding the National Insurance Categories for the 2016-17 tax year the Standard Insurance tables/categories A,B,J,M,P,Q,R,T,Y and Z will replace the contracted-out National Insurance tables/categories of D,E,I,K,L,N,O and V.