Preparing for 6 April: Payroll Changes Taking Effect This Tax Year
The new tax year begins this weekend, and with it comes the annual round of payroll updates that every employer needs to apply correctly from the very first pay run. Whatever the specific rate and threshold changes turn out to be this year, the process of preparing for them properly follows a similar pattern each April, and it's worth working through it methodically rather than assuming everything will simply update itself.
Confirming Your Software Has the Correct Updates
Most modern payroll software applies updated tax codes, National Insurance thresholds, and statutory payment rates automatically once the software provider has released their update for the new tax year. It's still worth actively confirming this has happened, rather than assuming it silently in the background, particularly by checking your first few payslips of the new tax year carefully against what you'd expect, rather than only noticing a problem once several pay runs have already gone through incorrectly.
Applying Updated Tax Codes
HMRC issues updated tax codes for many employees at the start of each tax year, reflecting any changes to their personal allowance or other adjustments. These need to be applied correctly from the first pay run of the new year, and it's worth checking that any codes issued specifically for your employees have been received and applied properly, rather than continuing to use the previous year's codes by default until someone notices a discrepancy.
Reviewing National Minimum and Living Wage Rates
National Minimum Wage and National Living Wage rates are reviewed and typically increase each April, and it's essential to check every employee's pay against the correct rate for their age band from the very first pay period of the new tax year, not just those you assume might be affected. It's a common and costly mistake to assume long-standing staff are automatically paid above the new rate without actually checking, particularly where pay hasn't been reviewed for some time and the wage floor has moved closer to, or above, what they're currently earning.
Statutory Payment Rates
Statutory Sick Pay, Statutory Maternity Pay and other statutory payment rates are also typically reviewed annually, and any employees currently receiving these payments need to have their payments recalculated using the correct new rate from the point it takes effect, rather than continuing on the previous year's figure until someone catches the discrepancy later.
Reviewing Student Loan and Pension Thresholds
If you have employees with student loan deductions or those affected by pension contribution thresholds, it's worth checking that any updated thresholds for the new tax year have been applied correctly, since these can affect deduction calculations in ways that aren't always immediately obvious from a quick glance at a payslip.
Communicating Changes to Staff Proactively
Whatever changes take effect this year, employees generally notice a different net pay figure before they understand why, which can create unnecessary concern or queries if nothing has been explained in advance. A short, proactive note explaining the main changes affecting payslips this tax year - even a brief summary of what's changed and why - heads off a wave of individual queries and reflects well on your business as an employer who keeps its team properly informed rather than leaving them to notice and worry on their own.
Getting the new tax year's payroll updates right from the very first pay run avoids a much messier correction process later. We can manage this transition for you every year. Find out more about Longleys Accounting Services.
Checking Your Own Budget Reflects the Changes
Beyond the mechanics of payroll itself, it's worth making sure your own business budget for the new tax year reflects whatever changes have taken effect - updated employment costs, any changes to the Employment Allowance, and any other business-facing announcements from recent fiscal events that affect your payroll bill. A budget built before these figures were confirmed needs revisiting now that the actual rates are known and in effect.
A Routine Task Worth Taking Seriously
The transition into a new tax year happens every single April, which can make it feel routine enough to handle without much dedicated attention. But the consequences of getting it wrong - underpaying staff relative to a new minimum wage rate, applying an incorrect tax code for months, missing a statutory rate change - can be significant, both financially and in terms of employee trust, and they're far easier to avoid with a bit of deliberate checking at the start of the year than to unpick once several months of incorrect payroll have already gone through. If you'd like your payroll transition into the new tax year reviewed properly, we're happy to help.